An Explanation of Your Choices in Homeowner Insurance

Having homeowner insurance gives you peace of mind in knowing that should an accident occur and destroy all or part of your home and your belongings, you have a policy in place that will help you rebuild or replace what you have lost. There are many facets of the home insurance industry that many people do not understand which often results in them not having adequate coverage or in their purchasing the wrong type of policy for their needs. There are two main types of policies you can look for when buying homeowner insurance. A basic insurance policy has named perils in the policy and will only cover any damage if it is caused by one of these events. This is the cheapest type of policy and if you are looking to save money and still have coverage, this is the one for you. A comprehensive policy is more expensive, but offers a much broader form of coverage. Under such a policy you can pay extra to have insurance against floods, earthquakes and other events that a standard policy considers an "Act of God". This is called optional coverage. Under such a policy you can have insurance for your valuables, such as jewelry, electronics, artwork, and furs. It can also include extra insurance if you have a dog that may injure a person on your property. The process of obtaining homeowner insurance is quite simple. If you own your home and do not have a mortgage then it is up to you whether you take out such a policy. If you have a mortgage, though, the lender will require you to have such insurance in place before you can sign the final papers. You pay the premiums for the home owner's insurance policy (either on a monthly or annual basis) and in return, if you incur any damages, the insurance policy will cover the costs of repairs. You will have to choose an amount of deductible, which means you will be responsible for paying a certain amount towards the cost of repairs. This is usually $500, but if you choose a higher amount, such as $1000, the premium costs will be lower. The amount of premium an insurance company charges you for a policy depends on certain factors that the company analyzes in order to determine how much of a risk you pose to the insurer. While the fact that you have had home insurance in the past and have never made a claim will be taken into consideration, it really plays a small part in determining the cost of your policy. The cost of homeowner insurance depends to a large extent on the amount of coverage you need to have to replace the home if it is completely destroyed. The larger your home, then the more expensive it is and therefore the greater cost involved in replacing it and so you need more coverage. In order to do a home owner insurance comparison, the company will need specific information to come up with an approximate amount of coverage and to determine your risk, such as the square footage, the types and amounts of safety features you have installed, the type of heating in your home and the material used in the construction of the home. The area in which you live also plays a part in determining the cost of your homeowner insurance. If you live in an area where there are frequent burglaries, this puts you into a different class of risk and will therefore mean a higher cost of premiums. The more safety features you have installed will lower this cost significantly.