If you are buying a home with a mortgage you will need home owners insurance. Home owners insurance isn’t the same as title insurance. Title insurance covers your home’s deed and problems that might arise as to the legal ownership of your home after you take possession of it. Homeowners insurance, on the other hand covers your home against physical damage such as a fire or internal water damage from broken pipes, and perhaps theft and personal injury.
If you are in the military and you are taking advantage of the low VA rates you should check out using USAA as your homeowners insurance provider to see what options they have. If you are not in the military and cannot use USAA, or if you are in the military and want to check some other insurance providers it is a good idea to make a few phone calls to get some quotes.
Like so many other insurances, there are many options and adjustments to the basic policy, such that you can customize what you get for a price that fits your budget. One thing you will need to keep in mind is that your mortgage company will require you to cover the replacement cost of your home with your policy coverage amount.
Replacement costs are typically covered by the appraisal when you purchase your home. Most insurance companies use the replacement cost found on the appraisal as the basis for the coverage amount. Some insurance companies adjust your coverage amount such that it is under your loan amount by 25%. This will save you money. To find out what you are covered for, you’ll want to ask about the extended coverage amount of your policy.
Another way to save on your policy is to call your insurance carrier or broker where you have your auto insurance. Often if you have multiple accounts you can get a discount on your policy so make sure you ask.
The last way that we’re going to discuss when it comes to getting a new homeowners insurance policy set up is setting the size of your deductible. Your deductible is the amount of money you have to pay into a claim in order to have your insurance company pay out their portion. Typically, the larger the deductible the lower your premium – just like car insurance.