Insure Your Success

Four tips to help you get a handle on homeowners’ insurance

By: Brian Niemann

Buying a home can be so overwhelming that it’s easy for first-time homebuyers, especially, to give minimal thought to the homeowners’ insurance process. Yet, if something happens to your home, homeowners’ insurance can make or break you. Before you just sign on the dotted line, here are four tips to guide you:

1. If you contact our company, we will give you three quotes. 

1. Replacement cost quote with ACV on roof
2. Replacement cost with 10 percent extended replacement cost and roof replacement
3. Replacement cost with guaranteed replacement cost (GRC) and roof replacement cost

Your mortgage lender can – and probably will – require you to have homeowners’ insurance. You may be required to purchase additional insurance, like flood insurance. You aren’t required to buy from a particular insurance company. Instead, compare coverage limits and price levels with our three quotes. Be sure you get the right type and amount of coverage. Since you’ll mainly deal with insurance companies during times of disaster, make sure the company you choose has great customer service and your best interest at heart.

2. Escrow your insurance payments with your mortgage payments.

If you’re like most homeowners, you’ll tack monthly insurance payments onto your mortgage check. The lender will pay your insurance premiums (usually your property taxes, too) out of your escrow account. Lenders prefer this option because it lets them know your insurance premiums are being paid, and their investment is well protected. Most likely, you’ll need to pay for one year of insurance at closing. Bring information about the insurance policy you have chosen and the money to cover the first year’s premium.

3. Make sure you’re getting adequate coverage.

The most important part of homeowners’ insurance is the coverage. Avoid paying for more than you need. Sometimes land cost can be high, depending on where you live, and you want to avoid overpaying for the additional coverage limits due to the higher land costs. Remember, we’re insuring your home, not necessarily your land, for replacement cost.

4. Understand the details of your policy.

It’s not enough to get the right policy level. Before you make a decision, understand these homeowners’ insurance terms, limits and coverages:

• Deductible: This refers to the amount you must before your insurance kicks in; the higher the deductible, the lower the annual premium.

• Liability coverage: This is coverage that will pay medical or legal bills if someone is hurt on your property, usually due to negligence.

• Personal property: Sometimes called the contents of your home, this is tangible property such as furniture, electronics and clothing.

• Premium: This is the price you pay, usually annually or monthly. If the loan is financed, the bank will usually have you make the payment through an escrow account. Banks like to make sure the premium is being paid and the policy is active.

• Replacement cost: This is the kind of insurance that pays the full cost of replacing your dwelling or personal property, up to a maximum dollar amount. Most standard policies offer replacement cost, but you want to be sure the maximum amount is high enough.

• Riders: These are policies you can include on your overall insurance policy to cover specific items. For instance, expensive antiques, jewelry and artworks are often covered under their own rider because they’re too valuable to be covered as regular personal property. Ask your agent for expensive items coverage limits.

• Electronic signature: Using electronic signature for policies helps speed up the process and gives agencies, like mine, the capability to write insurance anywhere within the state of Texas, especially the Coastal Bend.

Be sure you understand how all of these terms work together in your homeowners’ insurance policy. Ask questions to ensure you have the right amount of coverage at the right price!

Please give my agency – Brian Niemann Insurance Agency, Farmers Insurance – a call for your existing home or new home-closing insurance needs. We can get the quotes out on the same day in most cases. Our agency also offers windstorm, auto, business and life insurance. Call us today, and let’s get your new insurance quote started!

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