Homeowner's Insurance FAQ
If you're like most people, you'll need to take out a mortgage loan to buy a home. Generally, lenders require homeowners to take out special insurance policies that cover damage to the home. That's because insurance is a way to protect the lender (not necessarily you) if something happens to the house; you're less likely to walk away from your obligation to repay the lender if you know that insurance is going to cover repairs and replacements.
But homeowner's insurance is a little mysterious to most people, so here are a few answers to the most common questions.
Homeowner's Insurance FAQ
Some of the most common questions buyers have about homeowner's insurance include:
- How much does it cost?
- What does it cover?
- What do I do if something happens to the house?
Here's what you need to know.
How Much Does Homeowner's Insurance Cost?
The average homeowner's insurance premium is just over $1,000 per year, but that's a nationwide average. Costs can vary significantly depending on where your home is located, its size and how prone it is to natural disasters. For example, a home in Long Beach might be more expensive to insure against floods than, say, a home in Detroit, Michigan.
Several factors go into insurance rates, including:
- The home's value
- The deductible you choose
- The company you work with
- The location of your home
- Whether you've filed a homeowner's insurance claim in the recent past
- What kind of history the area has with natural disasters
What Does Homeowner's Insurance Cover?
Homeowner's insurance typically covers a wide range of disasters, but some types of disasters, like floods, require the purchase of additional coverage. In most cases, homeowner's insurance covers:
- The home itself
- Personal property
- Other structures on the property, like sheds and barns
- Liability for injuries or damages to another person's property
Every policy is different, though, so you'll have to talk to your insurance agent to find out what your policy covers. And if there's something you're particularly worried about, like flooding, it's a good idea to have a conversation with your agent about buying special coverage.
What Do I Do if Something Happens to My House?
If something happens to your house, whether it's insured or not, the first thing you should do is get yourself, your family and your pets to a safe location. Don't enter the house after a natural disaster unless emergency services personnel have told you it's okay to do so - and even then, if you notice unsafe conditions (like a broken gas line, sparking electrical outlets or anything else), you should leave immediately.
When you're safe, your first call should be to your insurance company. Explain what happened as best you can and ask what you should do next. Some insurance companies offer displacement coverage, which can kick in and help you pay for a place to stay and food while you're displaced from your home. Again, though, every insurance policy is different, and what one company covers might be unheard of in another company.
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