NigCareers

What is home Insurance?

Before you buy your home insurance, it is better you get to know what it is all about. Since home insurance is not as popular as car insurance, it is not unlikely that many people may not understand the term properly. Even if you ask some homeowners what home insurance means, they may not be able to give you reasonable answer. I think our government and insurance companies have big roles to play in this area. Sorry, if I digressed a little. Let’s go back to our definition. Home insurance is simply a type of property insurance that protects an individual’s home and its content against perils such as fire, wind, lightning, hail, vandalism and theft etc. It is important to note that basic home insurance policy does not cover flood, earthquake or other acts of God. If you want your policy to cover these aspects, you will have to make a request for the extra coverage. Some people refer to home insurance as homeowners insurance because the insurance policy does not only provide a cover for just your home. It also provides cover for other structures that may be damaged and personal liability that may arise as a result of the disaster to your house. As important as home insurance is, you still find out that not all homeowners have it in place. The reason may be due to the fact that government does not make it compulsory for everyone. This is a clear difference between car insurance and homeowners insurance. However, if your house is financed through mortgage loan, the lender will require that you buy home insurance as part of the requirements for the loan. This will protect the lender against loss of investment in case anything happens to the property. Remember that the property serves as collateral for the loan. That is why the lender will always require that any financed property be insured. If government had not made car insurance compulsory, many drivers would rather put their cars on the roads uninsured. I like the decision of government on the car insurance. Instead of allowing people driving without insurance, government set minimum car insurance coverage requirements which at least, every driver should comply with. Although these minimum car insurance coverage requirements vary from state to state, it provides a safety net for drivers and the public in case of car accident.

Read Also: Minimum Car Insurance Coverage Requirements by State

Government can do the same thing for home insurance. If it is made compulsory for everybody, you will discover that the homeowners insurance premium will even come down dramatically from its current rate. This will make it more affordable for homeowners.

Home Insurance for Financed Properties

I mentioned that government does not make homeowners insurance compulsory. However, if you obtained mortgage to finance your home, the lending institution will require that you buy homeowners insurance to cover the cost of rebuilding the house or the amount that will cover your loan balance. This kind of insurance is usually being referred to as forced insurance. Ordinarily, you may not have bought this insurance if not that your lending institution requires you to do so. Your lender will require that you name them as an additional insured. This is a standard for any financed home. It will be to your advantage if you buy the insurance policy by yourself. This will afford you the opportunity to shop around and select the policy that best suit you both in cost and coverage. But if you refuse to buy the insurance by yourself, the lending institution may force the policy on you by buying the home insurance on your behalf. The main disadvantages of this are; the policy may be more expensive and you may not be adequately covered. The lending institution will only be interested in getting its loans balance back. That means, if your home is not insured to rebuild in case of any catastrophe, your lender has a security interest in the loss settlement from your insurer to the tune of the loan balance and any accrued penalty and interest. It is always to the advantage of the homeowner and the lender to insure a financed home to purchase replacement cost coverage.

How much does homeowners insurance cost?

According to the Federal Reserve Bureau, the homeowners insurance average cost per annual is between $300 and $1,000. This figure is just an estimate. It will not represent the actual situation of many homeowners. Nevertheless, there is another way one can estimate the annual insurance premium on a particular house. This can be done by dividing the value of the home by 1,000, then multiplying the result by $3.50. However, in order to have a realistic homeowners insurance estimate, I suggest that you get quotes from four or five home insurance companies.

For homeowners that are seeking for ways to reduce their insurance premium, they can achieve this by installing security alarm systems, smoke detectors and dead-bolt locks in their homes. Installation of new roofs or storm shutters can help in protecting the house against natural disasters. If you are really keen at enjoying cheap home insurance premium, you can make this as part of what to do at the planning stage of your home. For instance, you can construct your building in such a way that will make it withstand wind and hail. The building constructed in such way may not attract high insurance premium. Also, if your home is very close to fire department, you might enjoy cheap home insurance premium.  On the other hand, if your home is located in areas with high occurrence of storms, fires or earthquakes, you should expect higher premium

However, after the payment of your first premium, the subsequent amount you will pay may change depending on some factors. Some of the reasons why your premium may change include the following:

Property’s Age: In general, new homes are usually cheaper to insure than old ones. If your home is still new, home insurance companies can offer up to ten per cent discount.  However, you may discover that your insurance premium increases gradually as your home becomes older. The reason why old property may be more expensive to insure is that, their replacement cost may become higher than their market value overtime. This may happen if the materials used in the construction of the building become scarce and too expensive thereby making it impractical to bring it back to its original state in case of damage or loss.

Discounts: It is possible that you qualify for discounts. For instance, if you have one or two other vacation or rental properties you want to insure with the same insurance company, you may be able to enjoy some discounts provided you ask for it. Also, if your credit score has increase, you might be granted discounts. Home insurance companies usually check credit score to determine the home insurance quotes they will offer you. If you are not getting a good rate from your existing insurance company, this might be the right time for you to shop around for better insurance quotes. On the other hand, if your credit score is bad, you may not get cheap home insurance premium as most companies will believe that you may find it difficult maintaining or repairing your home. This can cause further damage to your home which may likely lead to possible claims. Another way you can enjoy discounts is by signing up a new policy before your current one expires. Some home insurance companies offer as high as ten per cent discount for early signing up.

Claims history: Have you filed claims recently? If yes, you may expect higher premium in the year following. But if you have being paying your premium consistently without filing any claim, you can be considered as a low risk customer. If at all you don’t enjoy any discount based on this, you can rest assured that your home insurer will not increase your premium except other things change. If you actually want to enjoy cheap home insurance premium, it is always good to shop around before you buy your first policy. By shopping around, you can discover insurance companies that offer no claim discount or loss forgiveness. Loss forgiveness means that the home insurer will not increase your premium due to the first loss on your home. You may think you will not make any claim in a short term period. The truth is that, certain events are not predictable and you may have less control over them. After all, that is the essence of the homeowners insurance in the first instance. Perhaps your current home insurer is not offering you no claim discount or bonus, there are some insurance companies that will grant you this bonus if you switch to them as long you don’t have a claim in your record.

Improvements: If you make major improvement to the building such as bathroom or kitchen renovation, expansion of room and purchase of new electronics, this may increase the amount of your dwelling coverage. Once the amount your dwelling coverage increases, other coverage such as other structures coverage, personal property coverage and loss of use coverage will automatically increase. These are all expressed as a percentage of dwelling coverage.

Change in Policy: If there is a change in your existing policy, your premium cannot remain the same. You or your insurance company can initiate the change in the policy either by removing from or adding to the existing coverage. But before any change can be effected, it has to be communicated to the other party. For instance, you may like to save some money on what you are currently paying as home insurance premium. In order to achieve this, you may decide to limit the policy to just dwelling coverage. With this, the amount you pay as premium will reduce significantly.

Deductibles: Deductible is the amount you promise to pay towards the repairs of your home in case of any damage to it. If you raise your deductible, you premium will reduce. However, setting your deductible too high will increase your risks if anything should happen to your home. Your insurer may not carry our any repair until you have paid the amount you promised as deductible. Therefore, if you know that it may be difficult for you to provide the money set as deductible as the occasion may demand, it is better to set your deductible at a reasonable level.

Riders: Riders are the additional benefits that can be bought and added to a basic home insurance policy. These options allow you to increase your coverage. Riders cover risks that are beyond the scope of the main policy, resulting in a more comprehensive protection. So, if you are asking for riders, you should expect an increase on your existing homeowner insurance premium.

Read Also: How to Get Really Cheap Car Insurance Quotes

Types of Home Insurance Coverage

You may want to know what your policy cover. Actually, standard homeowners insurance provides six basic covers namely:

Dwelling coverage

Dwelling coverage is also known as Coverage A under home insurance policy. This is the part of your policy that covers the value of your home where you dwell and the personal property within the house.  People usually confuse dwelling coverage with home insurance.  Dwelling coverage may cover all the named perils such as lightning, fire, wind, hail sleet, explosions, smoke, falling objects and vandalism. It is more restrictive as it does not extend to structures that are not directly attached to your home such as garages, sheds and guest houses.  A homeowner can choose to purchase dwelling coverage to cover the house he owns which does not require comprehensive home insurance. Such properties can be vacation or rental purpose. If you have a rental property, the content of such property may not be your concern. Your major concern will be how to secure your property which is the source of income to you. If you have dwelling coverage in place, you can rest assured that will have your property back if it gets damaged by the tenants. Dwelling coverage will pay for the repair of your house and other costs like electrical wiring, plumbing, heating and air conditioning. Therefore, if a homeowner cannot afford to buy comprehensive home insurance, dwelling coverage may be sufficient for you. This is better than not insuring your property at all. You can choose the amount of dwelling coverage that you want to purchase but the amount should be sufficient to rebuild your house in case of total loss. If you are buying comprehensive home insurance, the amount of the dwelling coverage you purchase will determine your limits for other types of coverage as some of them are expressed as a percentage of your dwelling coverage. That is why you need to ensure that you buy sufficient dwelling coverage. You can work with your agent or use home insurance calculator to know how much you should buy that will adequately cover your needs.

Other structures coverage

This is known as Coverage B. This aspect of your homeowners insurance covers structures on your property that are not part of or attached to your home such as detached garages, sheds, barns, fencing, driveways, carports, sidewalks, gazebos, patios, retaining walls, greenhouses, swimming pools, pool houses and guest houses

In most standard home insurance policies, if there is any damage to your other structure, the value for the damage under Coverage B is normally calculated based on replacement value. That is, you will be paid the amount it will cost to repair or replace your home based using materials of similar quality to what was damaged. You may want to know how much it will cost to insure your other structures. Home insurance companies will normally include other structures coverage that is 10% of your Coverage A (that is dwelling coverage). For example, if your Coverage A is insured for $150,000, your policy will provide $15,000 in Coverage B (that is, other structures coverage). This means that if anything should happen to your other structured as contained in the named perils, you can be paid to the limit of $15,000 which is the 10% of your dwelling coverage. If 10% will not be enough to replace the detached structures on your policy, you can ask your agent about the possibility for additional coverage. They know how to work this out for you. On the other hand, if you don’t have other structures and you don’t see any justification for paying for this coverage, you can equally discuss with your agent. He may be able to work out special discount for you.

Personal property coverage

This is known as Coverage C.  Personal property coverage can also be referred to as Contents coverage. This will provide cover for your common household furniture, dishware, electronics and clothing etc. The amount of coverage included in Coverage C for personal property varies by policy and by type of personal property. Many Insurance companies set this coverage to the limit of 50% of the Dwelling Coverage A. For example, if your Dwelling Coverage A is set at $150,000 your Personal Property Coverage C would be set at 50% of $150,000 which equals to $75,000. Notwithstanding there are some home insurance companies that will allow you reduce these limits to as low as 25%. It makes sense for someone who does not have much personal belongings to reduce his personal property coverage if he is allowed to do so. At least, this will save him some few bucks on his premium. However, 50% of Dwelling Coverage as a limit may not even be sufficient for people having expensive valuable possessions. This class of people may require that their Personal Property Coverage C amount and limits be set higher by endorsement. In case you have you expensive valuable jewelry or other specific items that you want to protect, you need to discuss this with your home insurance agent.  Under this coverage, if your property is damaged, you will be paid the cash value of the item. That is, your home insurance policy will only pay for the worth of the property at the time the property gets damaged. This amount is usually calculated as the cost of the property less depreciation. However, though expensive items like jewelry, furs, art, collectibles and silverware are covered; home insurance companies usually put dollar limits on them if they are stolen. Many standard home insurance policies will cover only about $1500 for jewelry. In case, you have expensive jewelry, you should discuss the possibility of endorsement with your home insurance agent.

Loss of use or additional living expenses coverage

This is Coverage D under home insurance policy. Loss of use or additional expenses coverage pays for the additional costs you incur for reasonable housing and living expenses if a covered event makes your house temporarily uninhabitable while it’s being repaired or rebuilt. The typical limit of coverage for loss of use or additional living expenses coverage under standard home insurance policies is 20% of your dwelling coverage limit. This means that if you have $150,000 worth of dwelling coverage, your loss of use coverage would be approximately $30,000.

Personal liability coverage

Personal Liability Coverage usually called Coverage E provides coverage for bodily injury and property damage sustained by others for which you or your family members are legally responsible. This Coverage E protects you against lawsuits for bodily injury or property damage that you or family members cause to other people. Someone may accidentally fall down at your home or your dog bites any of your visitors. If the person institutes a law suit against you, your insurer will defend you and pay any damaged to the injured person up to the limit of liability. Unlike other coverage that have their coverage limits attached to Dwelling Coverage, the limit of personal liability coverage is usually set by the policy holders. Most home insurance policies provide a minimum of $100,000 in personal liability coverage. This implies that your insurer will pay up to the limit of this amount to injured persons per accident you or your family are responsible for. However, if this amount is not adequate and you feel you need more protection, you can discuss this with your home insurance broker. Notwithstanding, there are certain liabilities which will not be covered by personal liability coverage under your home insurance policy. These include liability resulting from an automobile accident; bodily injury or property damage caused intentionally by you or a family member in your home; injuries or damages sustained by you or family members in your home; and business activities or claims related to your profession. Therefore, it is important you find out from your home insurance broker which liabilities are covered and which ones are not.

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Medical payment coverage

This is called Coverage F in home insurance policy. This coverage protects you against medical costs you might incur if someone is injured on your property. The homeowner is at the liberty to choose his limit of coverage.

Different types of home insurance policies

Under homeowners insurance you need to familiarise yourself with different types of home insurance policies that are available. I don’t want you to confuse the types of home insurance coverage discussed above with the home insurance policies I want to talk about in this section. They sound the same but there can be a slight difference between them especially when it comes to homeowners insurance. Types of home insurance policies discussed here refer to the type of property or situation covered rather than the type of coverage or the amount of coverage for which that property or situation enjoys. It is possible for two different people to under the same type of policy and don’t enjoy the same level of coverage. The reason is that some insurance companies offer some sorts of flexibility to cater for different customers’ needs and also to define the level of risks they are willing to take. Therefore, before you buy any policy, it is important for you to understand the perils such policy covers.  Some homeowners insurance may cover named perils while some may be open perils policy. These two terms “named perils” and “open perils” may sound somehow technical but they are simple to understand. What the “named perils” means is that the policy will only provide coverage for losses specifically mentioned in the policy. That is, if any peril is not listed in the policy, it means that your policy will not cover it. The implication of this is that, the fact that you buy a home insurance policy is not a guaranty that your house is adequately covered. If your house happens to be affected by any peril not listed in the named perils, you will be totally responsible for the loss or damage you might suffer. That is why it is very important you read through your policy before you commit yourself to it. On the other hand, open perils will protect you against all losses except such loss is specifically excluded from the policy. Essentially, open perils policy will specifically mention the losses that are not covered in the policy. This means that if any peril is not listed among the excluded perils, then such peril is covered by the homeowners insurance policy. The following are the list of perils that are commonly covered by insurance companies:

1. Fire or lighting
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damaged caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption
11. Falling object
12. Weight of ice, snow or sleet
13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or from a household appliance
14. Sudden and accidental tearing, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire protective system
15. Freezing of a plumbing, heating, air conditioning or automatic, fire protective sprinkler system, or of a household appliance
16. Sudden and accidental damage from artificially generated electrical current. Please note that this does not include loss to a tube, transistor or similar electronic component.

Now, let’s discuss about different types of home insurance policies available.

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HO-1: This is called basic coverage as it only provides coverage for damage to your home and its contents against the following named perils:

1. Fire or lighting
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damaged caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft (limit of $1,000)
10. Volcanic eruption

This type of home insurance policy does not cover homeowners personal liability insurance. For this reason, people don’t usually buy this basic coverage as it does not provide adequate coverage on the house. If you finance your home by mortgage, it is not advisable that you but this type of policy.

HO-2: This type of home insurance policy is called broad homeowners insurance as it provides broader coverage than HO-1 type of insurance policy. In addition to all the named perils under HO-1 policy, HO-2  provides additional named perils. Specifically, the following perils are covered by HO-2 policy:

1. Fire or lighting
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damaged caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption
11. Falling object
12. Weight of ice, snow or sleet
13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or from a household appliance
14. Sudden and accidental tearing, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire protective system
15. Freezing of a plumbing, heating, air conditioning or automatic, fire protective sprinkler system, or of a household appliance
16. Sudden and accidental damage from artificially generated electrical current. Please note that this does not include loss to a tube, transistor or similar electronic component.

HO-3:    You can call this special form homeowners insurance policy. This home insurance provides coverage for your home and attached structures such as deck, garage except the risks are specifically excluded from the policy. In addition, HO3 policy also protect your belongings against all named perils. It also provides personal liability coverage. You can tell your agent to specifically exclude any peril you don’t want to cover in your policy. In general, home insurance companies will usually have the following perils in their exclusion lists:

1. Ordinance of law
2. Earthquake
3. Power failure
4. War
5. Flood
6. Neglect
7. Intentional acts
8. Nuclear hazard

HO-4: HO4 is known as renters insurance. This type of insurance policy is for those people who are renters and desire insurance coverage for themselves and their belongings. If you are a renter, you should understand that your landlord’s insurance does not cover your personal belongings. When you buy HO4 renter’s insurance policy, you will enjoy coverage against all perils listed in HO2 homeowners insurance policy with the exception of the building. The landlord is responsible for the dwelling insurance coverage for the building. However, renter’s insurance policy provides personal liability insurance in case someone is injured while in your home.

HO-5: this can be described as a premium version of option HO3 policy HO5 policy covers everything in HO3 plan. That is, it protects you against all perils except they are specifically mentioned in the exclusion lists. Do you want to know the main difference between HO3 and HO5? The main difference between the two is that the former only provide coverage for your personal belongings against all perils named in the specified list. Whereas, HO-5 provide comprehensive coverage against all perils that are not specifically named on the exclusion list. This type of homeowners insurance policy is good for people with valuable personal belongings who may want to ensure adequate coverage in case of any loss. However, insurance companies may only offer HO5 policy to homeowners with new home or those that have their home located very close to fire fighters.

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HO-6:  This is condominium owners insurance. The need of this class of people is usually different from homeowners. HO6 provides coverage on personal belongings, walls, floors and ceiling against all perils under HO2 policy while the common areas and physical structures must have been insured by the resident’s condominium association under a separate policy. This makes HO6 to be limited in scope when compared to HO2 policy. For clarity, the following perils are covered by HO6:

1. Fire or lighting
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damaged caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption
11. Falling object
12. Weight of ice, snow or sleet
13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or from a household appliance
14. Sudden and accidental tearing, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire protective system
15. Freezing of a plumbing, heating, air conditioning or automatic, fire protective sprinkler system, or of a household appliance
16. Sudden and accidental damage from artificially generated electrical current. Please note that this does not include loss to a tube, transistor or similar electronic component.

HO-7: this is a modified HO-3 policy which is specifically designed for mobile or manufactured homeowners.  What do you understand by mobile or manufactured home? The term mobile home is often used interchangeably with the term manufactured home but in actual sense they mean quite different things. “Mobile Home” refers to homes built prior to 1976 when the Housing and Urban Development division of the federal government (HUD) code governing building standards for factory-built homes was instituted, greatly improving quality standards. On the other hand, manufactured homes are mobile homes built to new and higher HUD safety standards during or after 1976. Technically, they are no longer be referred to as mobile homes but instead as manufactured homes and are built to a higher standard of quality than then “mobile homes”.

HO-8: You can call this “modified or older homes” insurance. If you own a house that is old and there is possibility that its replacement cost is higher that its market value, home insurance companies may not be willing to insure the property. The reason is that, in case of total loss of the property as a result of the perils listed in HO1 above and the house needs to be rebuilt, it may be difficult getting the materials used to construct the building. On the other hand, the materials may be available at a very expensive price. Instead what HO-8 offers is to provide coverage for the replacement costs of the building using the modern available materials. HO8 provides the same protection as available in HO1. Therefore, the following perils are covered under HO-8 policy:

1. Fire or lighting
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damaged caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption

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Do you pay home insurance monthly or yearly?

The answer is; ‘it depends’. It depends on the insurance company you are dealing with. Some insurance companies allow their customers to pay monthly. This means that the customer can pay their premium with debit or credit card monthly. On the other hand, it depends on the plan that is okay for you.

Annual home insurance payments

If you opt for annual home insurance payments, you will be making a large one-off payment. For low income homeowners or people that have many other financial commitments to make, this may affect their cash flow. But if you can afford it, making annual home insurance payments eliminates some stress as you don’t need to worry about the premium every month.

Monthly home insurance payments

This option may be good for people that can’t afford to make a large payment at once as it will allow them to spread the payments over the twelve months period. But if you choose monthly home insurance payments, you might end up paying more as your insurer may charge you interest.

How to reduce your home insurance premium

• Shop around: It is always beneficial if you can take the pain to shop around. There is no way you will know whether you are having a good deal if you refuse to shop around. With the help of internet, you might not even need to go from one insurance company to another. You can do your shopping right from the corner of your home.There are quotes comparison websites which can help you in this matter. If your don’t know any particular in mind, you can just search homeowners insurance quotes, you will be greeted with flood of information. If the information is to large for you, you can restrict your search to something like “home insurance Florida” if you reside in Florida. By the time you get quotes from three or more insurance companies, you will be able to compare and choose the one that best suit your pocket.
• Pay Annually: If you have the cash to pay your premium upfront, you can actually save few bucks if you choose annual home insurance payments.
• Combine your insurance: Instead of having your car insurance, pet insurance and any other insurance with different insurance companies, you can have all your insurance policies with just one insurance company. This will increase your negotiation power. The insurer may be willing to offer you some discount discounts.
• Choose rightly: Not all coverage is right for you. You should choose just the one that you need. For example, if your home is on the side of a mountain, you may not likely be affected by flood. Therefore, in this case, there may not be any need for flood coverage.
• Install security devices: Home security devices such as fire alarms, fire extinguishers, additional locks and lockable bolts on your windows reduce the risks that you will make a claim. This can result to reduced premium. Besides, you family will be safer.
• Increase your deductible: If you actually install certain security devices in your home, this can increase your confidence that you may not need to make a claim. With this, you can increase your deductible. It gives insurer a level of assurance that you might not file a claim for small amount.
• Get the right value for your home: When it comes to homeowners insurance premium, emphasis is more on the cost to rebuild and not the cost of the property. For instance, the cost of your property will include land. If you include the cost of the land in the value of your home, it will lead to you paying higher premium. The truth is that, if your home is going to be rebuilt, you don’t need to pay for the land again.
• Buy the right home: The type an location of your home contribute largely to how much you will pay as homeowners insurance premium. If your home is too close flood prone area, you may need to pay additional premium.Therefore, you may need to consider the insurance you may likely pay on your home before you buy the property. The fact that a property is cheap does not mean that it will attract cheap home insurance premium.
• Maintain good credit rating: Before you buy your homeowners insurance, it is advisable that you apply for your credit report so that you can check for possible errors. Errors can ding your credit information. If you spot any error, ensure you follow it up to ensure that the errors are corrected. Most insurance companies will like to review your credit information in order to determine your creditworthiness. If you are not the type that has not been paying his bills on time, this may send a bad signal about you to the insurance companies. And it might result to higher homeowners insurance premium. If your credit is not in good shape, I suggest that you first deal with the issues that are affecting your credit. You may need to reduce your debt or your card balances. Paying your card balance on time may not be enough, you should ensure that you keep your credit utilization ratio low. A credit utilization ratio below 30% is ideal.
• Be a loyal customer: Have you heard about customer loyalty reward before? If you remain with your insurance for a long time and you have been paying your premium, you might quality for special loyalty discount. Such discount can save you between five and ten per cent depending on how generous the insurer is. If they don’t offer you discount, you can ask for it yourself. Since they will not want to lose their loyal customer, they may likely grant you your request. Nevertheless, you may need to constantly compare what you are paying as premium with other insurance companies in order to be sure that you are not paying too much in the name of loyalty.

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Benefits of Homeowners Insurance

Do you know why some homeowners will not bother to insure their properties? Some of them will not do because they don’t know the benefits they tend to enjoy. Here, let’s look at some of the benefits or advantages of home owner insurance.

• Protection: We understand that home provides a shelter for the owners or the occupants. But home is more than that. It is actually an investment whether it is self-occupied or rented. Your home may be the largest investment you may have to make thereby making it the a substantial portion of your net worth. Homeowners insurance provides you a protection over your investment. There are certain events that can happen and turn homeowner homeless. But if the home is adequately insured, you can be sure that your investment and valuables will be protected.
• Low Premium: Homeowner insurance premium is not as expensive as people think especially when you compare the amount you are paying to the value of the property. Good enough, you may not need to pay your premium upfront. Some insurance companies allow people to pay their home insurance premium based on the plan that is convenient for them. This makes it easy for the homeowners to factor the premium into their monthly expenses.
• Peace of mind: People generally say that no one can buy peace with money. It is true to some extent. But money can help you avoid certain things that can take away peace from you. Buying home owner insurance eliminates stress from you.
• Alternative accommodation: In the event of repairs which may necessitate that you move out of your home as a result of fire disaster or otherwise, your insurer will be responsible for your accommodation at no extra costs provided you buy the right home owner insurance. If you are not sure of what your home insurance policy cover, it is better to ask your insurer.

Disadvantages of Homeowners Insurance

With all the benefits mentioned above, that is not to say that there is no problem with home owners insurance. Below are the potential problems you may have with the insurance:

• Costs: If you are a new homeowner with mortgage, combining your mortgage payments and utility bills with home your owners insurance premium may pose financial burden to you. Also, the home insurance premium may increase over time especially if you make a claim.
• Limits: You need to understand that your standard homeowners insurance policy does not cover certain events like earthquakes and floods. If your home is vulnerable to these disasters, you might need to pay separately for these before your insurer can provide a cover. Also, there are limits placed on every home insurance policy. These limits may not provide enough cover that you need.

Is Homeowner Insurance Transferable?

One question that is common among the homeowners is whether they can transfer their home insurance to another person if they should move out of the house. On the other hand, some may want to know if they can inherit the home insurance on a property they just bought or inherited. If you find yourself in this situation, the best thing to do is to contact the insurer and explain the new development to them. You should remember that homeowner insurance is not about the property only. It also have everything to do about the owner of the house. Before the insurer arrived at the premium payable on the property, certain factors about the owner must have been taken into consideration. These may include credit score, age, occupation, animals owned and any previous claim etc. For this reason, existing homeowner insurance may not be appropriate for the new owner of the house. Therefore, there are two options available. It is either the existing insurance home policy is cancelled or it is reviewed to reflect the new situations. Cancellation of existing policy may attract penalty fee.

Insurance