At Frisco Insurance, we know that it is common for new homeowners to bring plenty of questions to the table. They know it’s crucial to have the right insurance policy for their home, and they want to protect their investment, but they may have never purchased such a policy before. If you’re in this situation, we would like to help you dig a bit deeper into homeowner insurance by going through a few of the most common questions and answers in the industry.
Why Should You Get Homeowner Insurance? What Is the Benefit?
It’s important to get homeowner’s insurance for a new home because it protects you financially from unforeseen negative events. If your home is damaged in a storm or a house fire, for instance, insurance can help to cover the cost of repairs. The home may need to be replaced entirely, and that can also be addressed. Even those who can easily afford a mortgage payment every month typically do not have the money on hand to make these types of extensive repairs in such a sudden fashion, and so insurance gives you a safety net and the peace of mind that comes along with it.
Homeowner insurance can also be used in theft cases. It can replace items that are stolen from the home during a burglary or damage that is done to the house in the process. If you have expensive items in the home, it is often a good idea to create some sort of documentation – even if it’s as simple as a video or a picture on your phone – so that you can show what you own and after the fact.
Finally, homeowner insurance can address injury concerns. If someone else slips and falls on your property or gets bitten by a dog, this can trigger a lawsuit against you personally. Your insurance policy can be used to cover the costs of the settlement, and it can help you in cases where you may have damaged property that is owned by someone else. Once again, it gives you the peace of mind of knowing that you have financial coverage (remove no matter) what occurs in the future.
How Are Homeowner Insurance and Property Insurance Different?
Homeowner insurance is a type of package property insurance policy that covers your home itself, as well as the contents or property inside it. The property insurance is what helps you with damage to the physical assets that you own on that property – your house itself and the outbuildings. But you can make the whole policy more comprehensive by adding liability insurance and clauses to cover injuries on the property. In other words, you start with property insurance itself and then you build out the homeowner’s insurance policy that you need to cover you in a wider variety of different ways. Most homeowner policies include Liability coverage as part of their package.
Is Homeowner’s Insurance Legally Required?
You know that car insurance is legally required, so you may find yourself wondering if the same thing applies to home insurance.
It does not. Legally speaking, you are not required to have a policy on your property. If you do not have one and the home is damaged or items are stolen, then the cost simply falls on you personally. You may also be personally responsible if someone is injured and you are liable. That’s the serious financial risk of going without insurance, but the law doesn’t dictate that you have to make any sort of decision about the coverage you buy.
That being said, if you are taking out a mortgage to purchase your home, then you need to check the terms with the mortgage lender. The vast majority of lenders will require that you have a homeowner insurance policy. They are investing their money in the home and they need to know that the investment is backed up by physical property. Homeowner insurance protects that property and, therefore, protects their investment.
How Could You Lose Your Homeowner Coverage?
You can lose your home insurance coverage if you have a lapse in payments. Technically, if you even miss a payment for a single month, then you may need to contact your insurance company to see if the policy has lapsed and has been canceled.
Many companies will contact you beforehand to see if they can rectify the matter without canceling it, such as in a situation where you may have simply misplaced a check or forgotten to mail it in. This is known as a grace period. Every insurance company has their own policies and can set up their own grace periods for clients, which is why it’s so important to know exactly what your policy states.
But remember that you need to be current on your payments so that, should some sort of unexpected damage occur, you can actually use the policy to cover that damage. You would hate to spend years paying every month, miss a month, and then be denied coverage because your policy had lapsed right before some sort of disaster, such as a home fire.
Will Your Policy Cover Cracks in the Wall?
Your homeowner policy may provide coverage for the cost of repairing cracks in walls, if the cracks were caused by a loss that you are insured for. An example would be if a pipe breaks and causes a water leak, which then lead to cracks in your walls; your homeowners insurance would likely cover the cost of repairs. Cracks in walls would NOT be covered by your homeowner insurance if the cracks are caused by subsidence or the natural movement and shifting of soil. This is why it’s so important to do a home inspection and to know about any issues that have occurred before and that may occur again.
What Else Isn’t Covered by Home Insurance?
The answer here is going to depend on the specifics of your policy, of course, but common things that are excluded are floods and earthquakes. You can buy specific coverage for a flood or an earthquake, or some other type of disaster, but these are not automatically provided. Fortunately, they are also relatively rare events, but it’s wise to consider your own risk depending on where the property is situated and the environmental factors that play into this.
You’re also going to have potential limits on some of the assets you own, even the ones that are covered. It is typical for there to be an upper limit for valuable collections, for instance, jewelry. If you do have a collection of jewelry or something else that exceeds the level of this coverage, you can usually add additional coverage as a blanket or scheduled limit to address the coverage limitation. It’s wise to do this when you set up the policy initially so that you know you’re fully covered based on your own personal situation. But many people do not worry about the specifics because they know that even the minimum coverage will be enough to pay for the assets that they own.
We hope that these answers have been helpful for you, and we would be glad to provide any more details that you need here at Frisco Insurance. Please feel free to get in touch with us at your earliest convenience.
