At its core, homeowners insurance is just what it sounds like—it’s insurance you can buy to cover a variety of things that can go wrong in relation to your home. According to the National Association of REALTORS®, “Homeowners insurance covers the structure of your home and your personal property, as well as your personal legal responsibility (or liability) for injuries to others or their property while they're on your property.”
The same as with any type of insurance out there (whether it's car insurance, medical insurance, etc.), there are many different types of homeowners insurance policies. Location, construction type, condition, size, age, and more are all things that go into determining what type of insurance is right for you and your situation.
It might all feel a bit daunting, but educating yourself on what kinds of questions to ask can go a long way!
While the list of things you might need to know about homeowners insurance is a long one, these 8 things are a good place to start:
1. The location of your home can play a big part in the type of insurance you get, and how much it costs.
Is your house on a cliff on the coastline? Is it near a fire department? These facts will play into what types of insurance are available to you, and how much the various policies cost. As you can imagine, homes in more risky areas (like that gorgeous home on the coast with a waterfront view) can cost a lot more to insure.
2. Many common home insurance policies don’t cover flood damage or earthquakes.
You might assume that natural disasters would be a basic thing to include in a homeowner insurance policy, but think again! There is separate insurance for floods, and separate policies for earthquakes.
3. If you have a pool or hot tub, you may need liability coverage.
If you have a swimming pool or a hot tub, you’ll want to make sure you have some liability coverage. This will help you pay court costs or any other expenses if someone gets an injury from using your pool.
4. Home renovations need to be covered by a specific renovation policy.
If you’re doing a big remodel on your home or a series of smaller projects, you may want to seriously consider taking out a renovation-specific policy. The builder is usually only covered for new construction—not for work they’re doing on your home that already exists. Getting a renovation policy can help protect you if someone gets hurt on your property while the renovations are happening, for example.
5. Your home’s claim history can impact your homeowners insurance.
Did you know that your home’s history from BEFORE you even lived there is taken into account when your homeowner insurance rates are being determined? There are records of insurance claims made on your house. (But don’t worry—some of these records can actually help you and lower your costs!)
6. A high deductible can have several benefits.
You’ll want to keep your insurance cost reasonable, and as most people don’t end up actually needing to file insurance claims, this can save you a lot of money in the long run.
7. “Slow leaks” can be denied coverage (which is different than water damage).
If you have water damage to your home, you might assume that this is covered by flood insurance… but it’s not. A “slow leak” could be a pipe that’s been leaking for a long time and causing damage that you might not notice right away. Unfortunately, this type of damage can be very expensive to repair and is not covered by your typical homeowners insurance.
8. Not all policies cover sewer and drain backups.
Are you at risk of having a sewer or drain issue that could flood your house? Of course, no one wants to think about this happening, but sometimes unexpected or unusual rain storms can cause sewers and drains to overflow into people’s homes. Not every policy will cover the damage.
If you’re feeling confused about all of this, you’re not alone! Your real estate agent should be familiar with the homes in your area and what type of insurance is usually necessary. Be sure to do your research so you’re prepared to make the best decision for your unique situation.
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