Importance of Homeowners Insurance

Homeowners insurance policy will protect you against certain losses and damage to your new home and is generally required by lenders prior to closing.

This protects both the interest and yours in the event of an insured loss.


On rare occasions, the lender will collect the money you owe for homeowners insurance as part of your monthly mortgage payment and place it in a trust account, paying the insurer on your behalf when the bill is due.

Let's talk about the five most important things to know about homeowners, insurance coverage exclusions.

Most insurance policies do not cover flood or earthquake damage as a standard item.

You may need to buy these types of coverage separately.

Other coverages that are optional, but highly recommended are sewer backup and overland water coverage with an increase in storm-related losses and finished basements.

The coverage has become more important than ever.

Dollar limitations on claims.

Even if you're covered for a risk, there may be a limit on how much the insurer will pay.

For example, many policies of special limits for jewelry, bikes, watercraft, utility trailers and collectibles to name a few.

There is always an option to buy additional coverage to make sure you are adequately insured replacement cost if your home is destroyed, you'll receive money to replace it that only to the maximum of your coverage, so be sure your insurance is sufficient.

This means that if your home is insured for 550 it costs 650 to replace it, you're still only receiving 5 50.

If you add guaranteed replacement cost to your policy.

This will help ensure this gap in coverage.

Of course the best practice is to make sure you are always insured value, actual cash value.

If you choose not to replace your home is destroyed, you'll receive replacement cost minus the depreciation.

This is what's referred to as its actual cash value.

Some policies now include a clause that would allow you to take a cash settlement at the full insured value check with your insurance provider to see if this coverage is available.

Your liability, generally your homeowner's insurance covers your liability for accidents that happen to other people on your property, including medical care, court costs and awards by the court.

However, there's usually an upper limit to the amount of coverage provided.

Be sure that that amount is sufficient, especially if you have significant assets.

As always, if you have any questions about the home-buying process, please call text or email the Hamre Real Estate Team today!

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