When it comes to purchasing a homeowners insurance all people ask the same but very important question: how much am I to pay for it? To determine the exact amount of insurance premium you need to have a clear understanding of the factors that influence the process of premium determination. Let’s examine them briefly.
1. House characteristics. Such details as how old your dwelling is, what kind of roof it has, is there a garage near it, etc., greatly affect the amount of premium. As a rule, the older is the house the more expensive it is to insure it. Moreover, the total cost even depends on the material the house is built of – stone, wood or brick.
2. Location. It will cost more to insure a dwelling in a risky geographical location. For example, your insurer will definitely charge a greater premium if the house is in an area where tornadoes are a common thing or earthquakes often happen.
3. Protection systems. Safe houses result in lower insurance premiums. Any alarm technologies, sprinkler systems or smoke detectors contribute to the safety of your dwelling.
4. Personal factors. Your day-to-day habits may become a subject of a strict examination by an insurer. It’s widely known that smokers introduce a potential risk of having their house burnt because of improper treatment with cigarettes. That’s why the insurance premium for the owner that smokes will always be higher than for a person that doesn’t.
5. Claims history. If you already have a homeowners insurance policy with some claims in it you may expect a higher premium too.
There is a great variety of homeowners insurance policies offering a different range of protection. Moreover, the conditions and coverage are peculiar in each state.
Let’s review the most widespread types of coverage under homeowners insurance.
1. Dwelling coverage. Refunds the cost of repair or rebuilding like air conditioning, plumbing or heating but only if the latter items were harmed by an event specified in the policy.
2. Other structures coverage. Covers harm to additional buildings like fence, cottage or garage.
3. Personal property coverage. Pays the damage to the personal belongings that are inside your house.
4. Loss of use coverage. Reimburses extra expenditures caused by a temporary rent of another accommodation during the restoration of your own.
5. Liability insurance. Covers your property if either you or the members of your family are in charge of making harm to third parties.
6. Additional home coverage. You may need to insure any other type of event so it’s possible to negotiate it with the insurer and add it to the policy.
Homeowners insurance is not compulsory, i.e. you may own a house without any insurance. But if you have a mortgage there is a high possibility that your lender will demand you to purchase such insurance.
Speaking about homeowners insurance it’s necessary to understand the terms “all risks” policy and a “named perils” policy.
A “named perils” policy reimburses only the harm caused by the perils specified in the policy. The list commonly includes windstorm, fire, etc. An “all risks” policy pays losses caused by any peril except of perils specially indicated in the policy. Obviously, the latter covers a wider range of perils and is more beneficial but at the same time more expensive.
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