Facts You Should Know When Buying Homeowner's Insurance Policies

When you are preparing to close on your first home, one of the things that you're probably trying to sort out is your homeowner's insurance need. If you've never had homeowner's insurance before, you might wonder where you should start. You're not alone if this is the case. Here are some things that many people should know about homeowner's insurance before they close on their first home.

What Kinds Of Things Will Homeowner's Insurance Cover?

Your homeowner's insurance will provide coverage for all sorts of damage to your home. However, it's important that you fully understand what the policy does and does not cover. For example, while most homeowner's insurance policies will cover damage from things such as falling tree limbs, most homeowner's insurance policies don't cover things like flood or earthquake damage.

You'll need to have separate policies to provide coverage for flood and earthquake damage if these are concerns where you're living. In fact, if the home is located in an area that's rated for flood risks, your mortgage company may require that you purchase flood coverage through FEMA. 

It's important that you explore all of the coverage limitations and terms so that you can be sure that you're getting the coverage that you need.

What Are Your Reimbursement Options?

As you explore your homeowner's insurance options, you also need to consider your reimbursement choices. For example, you'll be asked to choose between replacement cost and actual cash value when it comes to the coverage of your home's structure itself.

Replacement cost, though it may lead to a higher premium, will provide you with reimbursement for the amount it will cost you to rebuild your home, up to your policy limit. Actual cash value provides you the insured value of your home less any depreciation for the property.

You'll typically receive more from a policy for replacement cost than for an actual cash value option. Talk with your insurance carrier about the best option for your current budget and future needs.

What Other Coverage Lines Are Provided?

In addition to the coverage of your home's structure, you'll also find that you can add coverage for your personal belongings. Talk with your agent about how to value those belongings so that you can be sure that you get adequate coverage.

You'll also be provided with liability insurance as part of your policy. Liability insurance protects you in the event that someone is hurt on your property. You can choose your liability limits based on your perceived risk. For example, you likely need higher liability limits if you have a pool or trampoline on the property.

To learn more, contact a company like Bear River Mutual Insurance.