Why Do Your Buy Homeowners Insurance?
There is no law that says you must buy homeowners insurance like the law that requires you to buy auto insurance if you own and operate a vehicle.
So why do you buy homeowners insurance? Could the answer be that you want peace of mind in case of a major catastrophe?
Your standard homeowners insurance policy extends coverage to your home (as property) for certain perils. A peril is a term used in the insurance industry to describe certain events that occur.
The Purpose Of Your Homeowners Insurance
To Buy You Peace of Mind
- If your home burned to the ground, would you have enough money to rebuild it? Most people do not have that much money available; which is one of the reasons why you buy a home insurance policy.
- An insurance policy is ready to pay out on a claim in case you do have a catastrophic loss such as a house fire.
To Pay For Covered Perils
- Here’s the list of perils that are covered in most homeowners insurance policies : fire, lightening, wind, hail, explosion, riot, smoke, aircraft, theft and vandalism.
- Those perils can sometimes cause large losses to your property.
To Pay For Large Losses
- You want your homeowners insurance policy available to pay for any large loss that you may incur.
- A large loss can maximize your policy limits.
- Maximizing your limits means that you spent up to the policy limit within your home insurance policy.
- Selection of policy limits determines whether a large loss is covered or not to the full value.
- If your home is insured for $300,00 that is your policy limit. If you have a claim and it will cost $400,000, the insurance policy will only pay up to the policy limit of $300,000.
Saving Money on Home Insurance
- Don’t ever cheat yourself on coverage by lowering the insured limits hoping to save a few dollars.
- To save a few dollars by carrying low limits just harms you in the long run.
- A better way to save some money is to raise your deductible.
- Another way to lower your insurance premiums would be to have a good credit score.
- A good credit score is a score above 750.
- If your credit score is below 750, look at getting some credit repair help.
- Credit repair help could actually help reduce your insurance premiums.
- Insurance companies take credit scores very seriously.
To Pay For Liabilities
- Liability coverage is included within a standard homeowners insurance policy.
- Each policy has a standard limit that can be increased at the time of purchase.
- Liability coverage includes bodily injury and property damage to another person outside the residency insured. In other words, coverage for bodily injury from your child hitting a neighbor’s child.
Related Posts:
