Purchasing home insurance is essential whether you are a renter or a homeowner. In either case, this type of insurance can protect you against moderate to catastrophic losses. The trick is, how you get your insurance and which kind to choose. The best ones could help you immensely if you should ever need to use it.
Choosing Your Deductible
Some people use their home insurance as a home upgrade kit, replacing their windows or siding with something newer and more beautiful every time there is a storm that may have damaged something. This has the advantage of keeping your home in pristine condition with relatively small out-of-pocket costs to you. However, it depends on having a lower deductible plan, such as $250 or $500.
Ultimately, people who have their home for a more prolonged timeframe tend to pay far more for their home insurance premiums if they have a higher deductible plan. Many people are not aware of this, but many home insurance companies allow you to have up to a $10,000 deductible. This can save you thousands of dollars over time because you are practically taking on small risks and component replacement responsibilities instead of handing them to your home insurance company.
Discounts and Tricks
All home insurance companies will offer you different kinds of discounts to get your business, but these discounts are not always what they initially appear to be. Different insurance companies have different actuarial standards, so their prices may be radically different from one another. Shopping around instead of accepting the first “discounts” you see can save you hundreds of dollars a year.
Reading Your Policy
When you get your policy information or even an offer for a new policy, you will receive an extended contract that is written in dense legalese. Despite the challenge, this puts in front of you, read this document carefully. If there is anything you do not understand, talk to your agent about it. Your policy may not have something you really need, or it may feature things you do not need that will end up costing you more. The second-worst thing is to pay more money than you should. The absolute worst thing is to have something terrible happen to your home and to not be covered because of a technicality such as not having flood insurance.
Often, additional parts of your insurance called “riders” need to be put in place for things like flood damage. When you first get your policy and have not purchased it yet is the best time to negotiate and confirm these kinds of things.
Decide on Payments
You have options on what to do for your insurance payments. Some people choose to escrow them along with their mortgage payments. Other people decide to make a “self-escrow” where they automatically transfer one-twelfth of their insurance premium into a savings account every month, so they can earn interest on the money until they make a single annual payment. Paying for an entire year upfront can save you a reasonable amount of money versus paying monthly, but it does depend on your ability to set up and not touch savings. Talk to your agent about additional questions you may have about home insurance.