Buying a home is a major life decision. Here’s a list of what you need to know to protect you, your family, and your home.

What is home insurance?

Home insurance provides protection and compensation for your home in the event of a loss or tragedy. Depending on your policy, this could include coverage in the event of theft, fire, tornado, water, hail, or other extreme weather damage. Home insurance can help cover costs to repair your home, replace your belongings, or even rebuild if necessary. Most plans also include liability coverage that protects the homeowner in the event of physical injury to another person on your property, although the extent of the coverage and amount of compensation depends on your policy.

Is home insurance required to own a house?

The simplified answer is: no, you are not legally required to have home insurance to own a home. However, there are many instances where proof of home insurance IS required:

  • Financing your home
    If you need to mortgage your home, most lenders require proof of home insurance coverage in case of unforeseen circumstances. Once a mortgage is paid off, you are no longer required to be insured. Regardless, it’s common practice to keep your home insurance policy active to protect what you’ve invested in your home.
  • Extreme climate conditions
    Certain areas are prone to natural disasters. If you live next to a body of water, there is a higher chance of flooding. If you live in an area prone to droughts and extreme heat, you’re at a greater risk of fire damage. Near a fault line? You could experience an earthquake. Due to increased risk, lenders could require specific insurance coverage depending on the area or region.
  • Owning a condominium or co-op
    The community may require your building be covered by condo insurance or home insurance. Policies vary depending on the community.
  • Living in a townhouse
    If the townhouse association has a master policy, you may need renters insurance. However, if they do not provide a policy, you may be required to buy home insurance.

What does home insurance cover?

Coverage specifics vary depending on the policy, but most provide protection and compensation for a range of financially challenging risks homeowners may face including:

  • Property damage – Damage and destruction to your residence and/or structures on your property.
  • Personal property loss – Damage or theft of personal property up to your policy limits.
  • Personal liability – If you, your family member, or even your pet, cause an accident, injury or property damage – it may be covered.
  • Added living costs – If your house is uninhabitable, you may be covered for alternative living arrangements while your home is repaired. However, there are daily and total overall limits in this instance.

What makes up a home insurance policy?

Every policy will have a different structure, however, below are some basic components included in most policies. Therefore, always consult an agent to find out which policy best fits your needs.

  • Declarations Page
    List of persons insured and address, contact information, description of the property, the dollar amount of coverage included in the policy, and the cost of the policy.
  • Coverage
    The full details of protection for your property and liabilities. This may include your house, its contents, structures on the property, and/or bodily harm or property damage.
  • Conditions
    An explanation of the duties and responsibilities of both the insured and the insurance company. This outlines what to do in the event of a loss, when and how to file a claim, and what the company procedures will include.
  • Exclusions
    This section examines the details and circumstances of what is not covered by your specific insurance policy under both property and liability coverage.

When should I buy home insurance?

You will likely need home insurance before applying for a loan since almost all mortgage lenders require insurance coverage before providing you a home loan.

What can affect home insurance premiums?

  • The Type of House
    Similar to car insurance, the features and characteristics of your home will affect the premiums. The age, structure, wiring, roofing, and siding of the house are all examples of characteristics that influence the cost of the premium.
  • Location
    The area or region where you will live can also affect your cost. Factors include weather, amount of traffic, and crime rates in the area.
  • Protection
    Investing in safety features can pay off. Alarm systems, smoke detectors, fire extinguishers, sprinkler systems, and deadbolt locks could lower your premium.
  • Personal Factors
    Your lifestyle can affect your premium cost. A good credit score may lower your costs, whereas smoking can increase your costs.
  • Prior Claims
    If you have a long history of filing home insurance claims, this could increase your premium.

Is home insurance tax deductible?

Insurance premiums are not tax deductible except under special circumstances.

To learn more about home insurance or to find the best policy for you, contact McInturff, Milligan & Brooks via the form below or at (423) 639-5171.

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