If you either already have a home or are looking to buy one, one of the most important things you can do is consider all your options for house insurance, otherwise known as homeowners insurance. Like anything in life, owning a home can be exciting but can also come with unexpected circumstances. No one ever plans for his house to catch on fire or for a tree to fall on her roof, but if these things happen, you'll want to make sure that you're covered by a solid homeowners insurance policy.
What is Homeowners Insurance?
Insurance for your house is like any other insurance. You pay a certain amount each month and, in return, the insurance company agrees to pay you in the event of certain types of damage. If you don't own a home, but are renting or leasing, you're not responsible for carrying homeowners insurance, since you are not the legal owner of the home. Homeowners insurance isn't technically required in every state, but most houses carry a mortgage, and most mortgage insurance companies require a homeowner to carry insurance.
Coverage
What your homeowners policy covers will depend largely on the type of house you have and, most importantly, what you want it to cover. You can work with an insurance agent to customize your policy to your needs. Most policies cover three basic areas: property damage (a fire or weather event), theft (a burglary) and liability (a non-family member having an accident on your property).
Deductible
Your deductible is the amount of money you will have to pay up-front for the insurance company to pay its portion (or claim). Deductibles vary greatly from policy to policy and are usually at the discretion of the policyholder. For instance, if you have a $1,000 deductible and you incur $2,500 worth of damage to your home, the insurance company will require you to pay $1,000 towards the damage, and it will cover the remaining $1,500.
Discounts
There are several things you can do to receive a discount on your insurance policy. Most of them are centered around protecting your home. For instance, installing a home security system will help prevent someone from breaking into your home and stealing your valuables. This makes it less likely that your insurance company will have to cover your loss, so they will usually extend a discount to you in exchange for you installing the security system. Other discounts could come from installing deadbolts on your doors and moving all of your other insurance policies to the same company.
Considerations
You should make sure to fully understand your homeowners insurance policy before signing it and making that first payment. You don't want to be surprised when the day comes that you need coverage and realize you don't have enough. Also take into consideration the area you live in and that most homeowners policies do not cover flood insurance. If you live in an area that is subject to flood, you may be required to purchase a separate flood-insurance policy.
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