Purchasing a home will most likely be the biggest investment that you will ever make. Because of that mortgage lenders are going to most likely require that you protect that investment with home insurance. Being protected from life's natural disasters such as fire and floods as well as incidents of theft will benefit you in the long run.
One of the most common misconceptions about home insurance is that it is a waste of money and completely unnecessary. This can’t be farther from the truth. The amount you will likely pay out for insurance pales in comparison to what you would be responsible for if there were to be a fire at your property. The average payout for a claim for fire between 2014 and 2018 was $80,000 dollars! While an accident such as a fire incident might not occur just the average claim of loss in general in 2018 averaged $13,814 dollars. The cost to carry insurance on your home can average $100 a month. That might seem steep, but after learning what you may lose out on if you don’t have insurance should be a wake-up call to you that it is definitely a necessity.
The type of insurance you do carry does have some drawbacks as it will not cover everything and you may have to add a specific personal property policy to cover such items. Fine jewelry or maybe a specific pricey piece of art might have to be covered separately. If during the pandemic you recently decided to start and run your own business from your home you may be surprised that your business items are not covered. However, it is easy to attach a business rider to your policy that will offer the coverage that you may need. While typically any visitors that you have to your property are covered by your home insurance some might be surprised that you and your family are not. This is where your own personal health insurance would kick in to cover your injuries not your home insurance.
The type of insurance that you get depends a lot on the type of home that you have. Some assume that the amount of insurance you buy relates to the market value of your home. This is not always the case. Most insurance is based on how much it would cost to rebuild your home in the event of a loss. It does not typically reflect how much your house is worth. This could mean that the amount of insurance you purchase can be overkill if you base it on the property's value. Make sure that you go over that with your insurance agent so that you can make sure you are getting the coverage that is adequate.
Is your home located on a flood plain or flood zone? Do you know that flood insurance does not usually come standard with your home insurance? Most of the time if you live in an area that is prone to flooding you are required to carry a policy that addresses that risk. A lot of people are learning the hard way that even if you don’t think the area that you live in will flood there may come a time when it will. You can purchase flood insurance from the government (National Flood Insurance Program) as well as private insurers. You can also check out FEMA’s Flood Map Service Center for more information about where your property lies in relation to your communities flood map.
The lesson from this blog is simple: Don’t leave things to chance. You never know what the future will bring and it is best to be as prepared as you can possibly be. It only takes that 1 in a million chance to produce a disaster that without proper coverage you could lose everything.
