If you live in California, chances are good that you own your own home. Protecting this investment with the right homeowners insurance policy is essential to keeping your home and personal belongings secure from unfortunate accidents and theft, but this isn’t always an easy task.
With so many companies offering different homeowners insurance policies in California, it can be difficult to know which policy will give you the coverage you need at the price you want to pay.
What is Homeowners Insurance?
If you’re buying a home, one of your biggest expenses will be your homeowners insurance. Choosing between several companies and comparing policies may seem like a hassle, but it’s actually quite important.
Whether you’re moving into a brand new house or are renewing an existing policy, knowing what to expect from your homeowners insurance is key. Finding affordable coverage isn’t impossible, but it does require some serious research on your part.
Consider these tips for researching and finding a policy that suits your needs and fits within your budget. Then sit back and relax—it may take some time, but soon enough you’ll have found yourself some solid insurance coverage!
What Is Not Covered by My Policy?
By definition, homeowner’s insurance does not cover everything. In fact, it doesn’t even cover every single thing inside your home—it usually only covers personal property that is susceptible to fire or water damage. When you read through your policy, you will want to pay attention for wording such as excluded perils and exclusions.
These are qualifiers that let you know what risks are not covered by your policy. If a tree falls on your house and damages your roof, but also chips one of your china cabinets inside, there is a good chance that only part of that would be covered. It’s always important to read up on what is or isn’t covered in detail so there aren’t any surprises when disaster strikes.
Why Should I Get a Deductible?
The deductible is typically one of two numbers that will determine how much your premium will be. Although you’ll want to do everything you can to make sure that damage is kept to a minimum, there are a few reasons why it could make sense for you to go with a higher deductible.
For example, if your home is worth $1 million and has $200,000 worth of damage, you won’t need more than $200,000 because any more would exceed what your home is actually worth.
In cases like these, it makes sense for consumers to take out policies with deductibles between $1,000 and $2,500 so they don’t have huge amounts sitting in an escrow account as they wait for their claims.
How Much Does It Cost?
If you’re looking for a new home or purchasing an existing one, one of your top priorities is probably how much homeowners insurance will cost. There are two different costs to consider when figuring out how much homeowners insurance will cost.
The first is annual premium and covers any claims you make throughout the year. The second is an upfront deductible, which is what you pay towards your claim up front before your insurer starts covering it. Once you know these costs, we’ll help you figure out how much coverage you need!
What Is Private Mortgage Insurance (PMI)?
If you don’t have a 20% down payment for your home, your lender will require you to buy PMI, which is private mortgage insurance. PMI protects your lender from losses if there is a foreclosure and helps you secure a lower interest rate.
When your loan-to-value ratio drops below 80%, your PMI typically gets cancelled. The best way to make sure that happens as soon as possible is by paying extra principal each month until it gets canceled.
Buying The Right Coverage For Your Situation
One of most important things to consider when purchasing homeowners insurance is your living situation. Are you renting, buying a home or renting out a portion of your home? The answer will determine what types of coverage you need, as well as where you can get it.
Different policies are available for condos and co-ops than they are for houses or townhouses. If you’re looking to rent out a room or even just a part of your house, make sure you understand landlord’s insurance policies before signing on that dotted line.
Shopping for The Best Rates On Homeowners Insurance
If you’re buying a home, it’s time to think about homeowners insurance. There are a few factors that affect what you’ll pay for homeowners insurance and some of them you can control, like picking your deductible and policy limits. Before making any decisions about homeowners insurance be sure to compare quotes from several insurers and speak with your real estate agent.
And once you’ve got all your information together, we’ve got an easy guide on how to purchase a policy that will help make shopping even easier. It includes tips on how to buy homeowner’s insurance after closing.
Buyer beware: as with most things these days, not all homeowners insurance policies are created equal; many don’t cover everything they should or come with confusing limitations that could leave you exposed if something goes wrong.
What Happens If I Decide To Move?
Depending on your policy, homeowners insurance can be canceled if you move out of state. If that happens, your belongings may not be covered if disaster strikes at your new address (which is likely why most home insurance policies have a clause that prohibits moving before some period of time has passed).
So before you settle down in a new city or state, make sure you’re aware of whether or not your homeowners policy will cover you where you’re going. Even then, it’s always wise to keep important papers and valuables with friends or family nearby.
How Do I Choose An Agent Or Broker?
There are so many insurance agents and brokers available that choosing one can seem overwhelming. But here’s a helpful way to narrow down your search: Figure out what kind of coverage you need, then ask friends and family members if they have any recommendations.
If they do, great! If not, simply make a list of insurance companies that offer what you need, then start calling agents or brokers to get a few quotes. Ask about their track record with past clients (which is something you should really look into before deciding on an agent or broker), then pick one based on your interview experience and budget.
How Do I Read My Policies And Endorsements?
An important part of your homeowners insurance coverage is knowing how to read all of your policies and endorsements. If you aren’t sure about what you’re being offered, it may be time for a professional opinion.
When selecting an agent, work with one who is knowledgeable about both home and auto insurance products—not every real estate agent can handle both.
Ask other people (like friends or family) if they know someone they trust and respect. If you don’t have anyone in mind, consider searching online for reviews or recommendations on popular sites like Yelp. Once you have someone in mind, call them up and ask some questions: What kinds of coverage do they offer? Are they willing to put together a package that meets your needs?