Your home is one of the largest purchases you’re ever gonna buy. This is the thing that is going to be your largest investment. This is the place that you want to make sure that you get the insurance right because if you make a mistake here, you could end up in a really bad position where either you’ve not protected that investment very well, or you may end up homeless, you may end up where you owe your mortgage company, and you don’t have a way to pay them. Because your home has been destroyed and you don’t have insurance adequately done. I’m gonna break that down for you and talk about the different types of coverages that are important. Make sure you’ve made a great decision about picking those coverages.
Looking For Or Buying A Home?
You’ve got these decisions that you got to make, but you may not even be aware of it, you may be just talking to your realtor and the mortgage company, and all they’re talking about is how much it’s gonna cost to buy this home. That’s got something to do with your home insurance, you may not even have heard of homeowner’s insurance or know all the different components of that policy. It’s not your fault, you just haven’t been in this position yet. We’ll ensure that you understand so that you’re not bound in a bind later.
Are you buying something, and you’ve got no idea what it is but your realtor, or your mortgage company says you’ve got to buy it? If you’re “I want this home, I gotta buy this”, you deserve to understand what you’re buying, feel good about what you’re buying, and then not have some gray area about what you’re buying.
There are a couple of different things that are important in this property part. The first part is the liability, and it is to protect you and your assets. It’s there so that if something happens, as someone gets hurt on your premises or you’re out somewhere and someone says, “Hey, I’m going to sue you because you did this to me”. That’s where liability comes into play, It’s going to protect you and protect your assets. The second part of it is the property part, this is for the building and stuff you own, buildings you have on the profit property, or structures you have on the property. There are two parts: the liability and the property, they work together as a bundle to make a homeowner policy, a type of Package Policy.
How Does Property Coverage Contribute?
If something happens to your home, it burns down or is damaged completely by a storm, and you’ve got a mortgage that you’re obligated to. You got to pay that regardless of whether you’ve got a house or not, whether it’s just a slab now because it’s been burned to the ground. You still have to pay what you’ve made an agreement with them. You must ensure you have enough insurance to take care of that, right? Another reason is that you must make sure you can rebuild that home. Inflation has affected the costs of lumber, building materials, and new labor in the last couple of years. You know, once upon a time, you could build a house for $100 to $250 per square foot, those days are gone, and now it’s gonna be $150 to $250 per square foot. An example would be: you have a 2000-square-foot house. Before, you might get it built for a couple of $100,000. You can’t do that anymore, It’s going to be easily $300, $400, or even $500,000 to rebuild that home. You need to make sure that you’re insured enough.
What’s the best homeowner’s insurance for first-time buyers? That’s a great question, and this post will help you figure that out. If you’re shopping around for the best homeowners insurance companies, or are just starting to explore what your options are, this post will help.
What Is Coinsurance Clause?
It means that they will not pay you for your claim if you don’t carry how much insurance you are exposed to. If you don’t cover your home and have enough insurance like you’re supposed to, you did not insure it for replacement costs and what it costs to rebuild it. The Insurance Company is not obligated to pay you your full claim as you’d like them to. They’re gonna do it based on a percentage, if you have 50% of the insurance, they’re gonna pay you 50% of the insurance claim. That doesn’t feel very good, but they’re just going to fulfill the obligation that you have bought. If you bought half the insurance you need, they’re only gonna pay you half the claim, and that’s not going to feel very good on claim day. Make sure you get enough insurance to ensure your home will be repaired and replaced. Most claims will be a partial loss, but the coinsurance penalty that I was talking about, “that clause” will affect you on those claims. If you have $50,000 in storm damage to your house, and you only have 75% of the claim, they will only pay you 75% of the claim. You want to be able to make sure that you replace your stuff, right? Well, you got lawn mowers, furniture, TVs, all kinds of different things in your house, clothes, and stuff that accumulates over the years, right? You may have $50 – $100,000 worth of stuff if not, more, you need to be able to replace that stuff if something happens. You paid money for that, and you need to make sure you’ve got enough insurance to replace that, and that’s your contents insurance. You may also have outbuildings like a shed, fences, and other things like that, we will make sure that those are covered.
Another thing is going to be living expenses. That’s also underneath the property coverages, you may not have ever heard of this, but living expense or additional living expense is coverage for you. They will pay you if your home cannot be lived in because of a covered claim. You can go stay with somebody else and not stay with your mother-in-law. You might say, “I love my mother-in-law”, we don’t mind staying with them, I love mine, too, but the reality is, who wants to stay with them for three months? If you have a substantial claim to your house that’s going to make it where you can’t live there, it’s going to be months before you can get back into your home. Now you think, “do I want to live with my relatives for three months?”. Underneath your policy is an additional living expense that you can have, it comes standard with a homeowner’s policy, but just make sure that it’s enough to take care of that for you.
Let’s Talk About Liability Coverage
It’s there to protect you if someone brings a lawsuit against you, they say you did this to me, you hurt me, or you did damage to my stuff, then they can file it underneath this policy, and it will protect you. It will take care of settling your claim and provide you with a legal defense. If they sued you, they’re going to bring you to court, and they’re gonna have an attorney. Attorneys are good at arguing. They are good at determining, coming up with an argument against you to say you did indeed do this thing, and who’s not very good at arguing? We may think we are, but we’re not licensed to do that. We’re not trained to do that. We don’t do that for a living every day. Attorneys do that for a living daily, so they will be better at it than you are. The policy underneath your liability insurance will provide that legal defense and represent you in a court of law to ensure that your best interest is taken care of. If you happen to be found at fault, they’ll pay the claim for you, which protects your assets, you from the attorney, and whenever they’re going to have the upper hand against you, this helps protect you for that.
Make sure you have educated yourself and are making well-informed decisions. In Reed Insurance, we have four promises. If your agent is not fulfilling these four promises for you. It is time for you to find a new independent insurance agent.
The first one is we make sure that your policy is doing its number one job is to protect your assets. The number two job of your agent is to make sure that you understand what you’re buying and feel good about it. You spend way too much money on insurance to be not feeling good about it. Third, your agent should make sure that your policy fits your budget and is adjusting to your lifestyle as you move down the line in your family. As your family grows or shrinks, you accumulate more assets, or you grow more in income, they need to ensure that your policy responds to that. The last thing is, as an independent insurance agent, we represent a lot of companies. So we’re gonna make sure that we’re going to find the right company that’s going to fit you personally and make sure that it fits all the different things that you need inside your insurance policy.
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Beaux Pilgrim, CEO