There are a lot of considerations that you have to make if you decide to purchase a home. One of the most important steps you need to take is purchasing a homeowner’s insurance policy. While homeowner’s insurance isn’t something that’s required by law, it is often required by lenders in order to obtain a mortgage – and even if it isn’t, protecting yourself financially against any damage done to your home by purchasing a homeowner’s insurance policy is a smart investment to make. The following are a few things that you should know about homeowner’s insurance:
Amount of Coverage - The amount of coverage you have depends a lot on the value of your property. Most homeowner’s insurance policies provide liability coverage of up to $500,000 in the event that someone is injured on your property or someone else’s property is damaged while on your property. As far as covering the actual construction of your home, most policies will cover up to 25 percent above what you paid for your home to replace it if construction costs end up being higher than expected. Homeowner’s insurance will also cover your possessions. Typically, replacement coverage is between 50 and 75 percent of the home’s value.
What’s Typically Not Covered - Most standard policies do not cover damage caused by earth movements, flooding and government actions, to name a few. Look over the policy carefully to see what is excluded. Some policies list what isn’t covered, others will only list what is covered and exclude everything that isn’t. If you want added protection against some of the things that are excluded, you can purchase additional coverage.
The Deductible - The deductible is the set amount of money that the insurance company will require you to pay before they pay out any claims. So, if you have a $1,000 deductible and $5,000 worth of repairs that need to be done, you’ll have to pay the $1,000 before the insurance company provides the rest of the money.
Rates - The rate is the amount you have to pay on a monthly basis in order to maintain coverage. The amount you pay depends on how much coverage you have as well as how large your deductible is. The bigger you make your deductible, the lower your payments will be, and vice versa.
These are just a few of the important things to keep in mind when purchasing a homeowner’s insurance policy.
If you're considering purchasing a new home in Novi or Northville, MI, contact the Michele Safford Group today.