When you buy homeowners insurance – which will be a necessity if you take out a mortgage loan to buy a home – these are three things you need to know.
3 Things to Know When You Buy Homeowners Insurance
Your lender will require you to buy homeowners insurance, but even if you pay cash for a home, your financial adviser might suggest that you get it. It’s like car insurance – it provides you with financial protection in the event of a catastrophe, disaster or accident.
Here’s what you need to know:
- You’ll need extra coverage if you have a pool.
- You may want coverage for things like floods and earthquakes.
- Your rates depend on your location and several other factors.
Here’s a closer look at each.
#1. You’ll need extra coverage if you have a pool.
If you have a pool, you might want to have liability insurance that protects you if someone has an accident. You can be held liable for all kinds of accidents that happen in your pool – so it might make sense to get coverage that pays court costs or other expenses. You can also purchase an umbrella liability policy, which will provide you an extra level of protection that doesn’t come with most standard homeowners policies. You should definitely talk to your insurance agent about your options!
#2. You may want coverage for things like floods and earthquakes.
Flood insurance isn’t usually a part of most homeowners policies, and if you took out a mortgage to buy your home, your lender may require you to buy an additional policy. Flood insurance is typically a separate policy – and you may need it even if you’re not in a flood zone. That’s because more than 90 percent of all natural disasters in the U.S. involve some type of flooding (such as after hurricanes or tornadoes).
#3. Your rates depend on your location and several other factors.
Your homeowners insurance rate will depend on several factors, including your home’s location. If you’re in an area that has quite a few disasters, the insurance company may hike up the rates. Homes located near fire departments, police departments and hospitals might cost less to insure, but the closer you get to a coastline (hello, 30A – we didn’t see you there), the more expensive your insurance is likely to be.
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