Buying a Home...need help with the insurance?

The Complete Guide to Home Insurance 

Homeowners Insurance 101: Are You Protected?

A homeowners insurance policy provides homeowners with financial compensation should they suffer losses related to their home. It would pay for the structure and contents of your home if they were damaged or destroyed, as well as legal costs if someone is injured in your home or on your property.

Every homeowner needs homeowners insurance. Here's what you need to know about it:

What does homeowners insurance cover?

Homeowners policies vary on what and how much they cover, but typically they'll cover all or part of your financial losses related to:

• The home itself, including the structure and its plumbing, electrical wiring and central air and heat systems.
• Other structures on your property such as sheds and fences.
• The possessions in your home, such as electronics, appliances and clothes, even when they aren't located on your property.
• Loss of use, such as paying for a hotel room while your home is getting fixed.
• Personal liability (financial losses should someone get hurt on your property and sue you).
• Medical payments for people who get hurt on your property.

What type of policy should you get?

There are a number of different kinds of policies -- ranging from an HO-1 to an HO-8 policy -- but most owners of single-family homes should opt for an HO-3 policy. This policy is fairly comprehensive, providing liability coverage and covering most "perils" to your home such as fire, wind and theft (but typically excluding flood, earthquake, war and nuclear accident). (The HO-1 and HO-2 policies cover less than the HO-3; the HO-4 is for tenants and renters.)

How much homeowners insurance do you need?

There are a number of things to consider when figuring out the details of your policy. First, ideally you will want to purchase enough insurance to cover 100 percent of the cost of rebuilding your home should it get damaged or destroyed. You can opt for an "actual cash value" policy option -- this pays you what the property was worth at the time it was destroyed, minus depreciation -- or something more comprehensive such as a "replacement cost" option, which does not factor in depreciation, or an "extended value" option, which will pay you up to 20-30 percent over your policy limit (so a $100,000 policy might have $120,000 - $130,000 worth of coverage; this is designed to protect you against things such as sudden hikes in construction costs due to storm damage). Go for the more comprehensive option so you can cover 100 percent of the cost to rebuild your home.

Next, consider the contents of your home. Make an inventory of your home's contents (the Insurance Information Institute's website can help you do this) to determine how much insurance you'll want to cover your home's contents. Again, rather than opting for an "actual cash value" option, go for a more comprehensive option, so you can afford to replace everything you own.

Make sure your homeowners policy has enough liability coverage to cover the total dollar amount of your financial assets, like your home, retirement accounts, investments, and anything else worth money.

You may also need to add onto the policy. Most standard homeowners policies do not protect you in the event of floods and earthquakes, so if you live in an area prone to these types of events, you may want to purchase extra insurance. If you have many valuable items in your home such as fine jewelry or expensive artwork, you may need to add a so-called personal property provision to your policy, which will make sure you are fully reimbursed for these if they are destroyed, damaged or stolen.

When should you buy homeowners insurance?

Most of the time, your mortgage lender will require you to purchase homeowners insurance before it will sign off on your loan (this protects the lender's interest in your home). But even if you don't have a mortgage, it's a good idea to have homeowners insurance to protect your investment and provide liability protection. Review your coverage each year to make sure you still have enough coverage to meet your needs; remember, you can add on to your homeowners policy at any time.

How do I shop for homeowners insurance?

  Contact MVP Agency and let us do the shopping for you! We can help advise the right type of coverage and make sure that you get exactly what you need. The right policy will give you the coverage you desire at a price you can afford. The service we provide will be help in determining what those needs, finding the right price, and making sure you have the proper documentation so that nothing gets in your way of signing those closing papers and receiving the keys to your new home! Whether its your first home or tenth, it is always a big decision and can be a stressful time, we want to make it smooth and exciting for you so you can just enjoy the process and get ready to unpack!