Homeowners Insurance Basics

When looking at homeowners insurance there are a few factors to consider before paying the premium for the policy. This includes the coverages that are provided, discounts that are available and how the premium is calculated. Buying a home insurance policy is a big step and requires a bit or research to get a good policy at a good price.

One factor to consider when looking at homeowners insurance is the coverages that are provided. The basic coverages on a homeowners policy include replacement cost coverage, contents coverage as well as liability coverage. The replacement cost coverage is the amount or cost it would take to replace the home in the event it is damaged and is different from the actual value. Contents coverage will pay for the contents of a dwelling that are damaged, stolen or destroyed by some peril such as fire. Liability coverage will pay for medical coverage in the event that someone is injured on a person’s property and legal costs in the event that they sue.

Another factor to consider when looking at homeowners insurance is the type of discounts that are available on the policy. Discounts come in many types and can include things like protective devices such as a smoke alarm, a dead bolt lock and a fire extinguisher. Another discount that is available is called a multi-policy discount. That is when an individual gets a discount for having more than one policy with the same insurance company A discount can also be applied if an individual is a non-smoker or belongs to a group such as an alumni association. Discounts are designed to lower the cost of the premium because they are seen as decreasing the risk to the insurance carrier.

The premium for a homeowners insurance policy is calculated by various insurance companies using different factors. Many insurance companies use the age of the house as well as when the utilities have been updated as a factor in the premium. Insurance companies also use an individual’s credit score and age as another factor that goes into the premium. However, some states only allow the use of a credit score as a discount on the policy. The proximity to a fire station or a fire hydrant are also a factor that goes into the premium. Any claims that have been made are also a factor that affect the premium that is being paid.

Before purchasing an insurance policy it important to do research ans get price quotes from different insurance companies. There can be a big difference in the price of the premium from one insurance company to another. Knowing the basics of a homeowners policy will benefit those who are looking to get a good policy at a good price.