Just Bought a Home! Now It’s Time for Insuring That Home. Here’s the Process.
So, you’ve finally bought a home — congratulations! Buying a home is one of the largest financial investments a person can make, and it often a decision that’s made for several decades, if not an entire lifetime. For these reasons, it’s especially important to insure your home with homeowners insurance to protect you investment for the future. In this article, our insurance experts here at Palm Desert Insurance have compiled a short guide on the process of buying homeowners insurance and how to find the right fit for your home. Read on to learn more, and contact our Palm Desert, CA team at (760) 341-2345 to speak with one of our insurance agents today!
What is Homeowners Insurance — And How is it Calculated?
Homeowners insurance is a type of package insurance that gives you several kinds of coverage in areas relating to your home, property, and family. Typically, a homeowner’s insurance package will have coverage for the following areas:
- The Structure of Your Home – In the event of unforeseen structural damage to your home itself, homeowners insurance will cover a sizeable portion of the cost in most cases.
- Your Personal Belongings – Should accident or theft destroy your personal belongings, most homeowner’s insurance policies offer coverage of 50 to 75 percent of your home’s insurance value (discussed below).
- Property Liability – Homeowners insurance offers a degree of liability protection for accidents or altercations that occur on your property or are caused by members of your family to other people.
- Additional Living Expenses – ALE insurance is a branch of homeowners insurance and helps pay the additional costs incurred when a homeowner must living away from home due to damage from an insured disaster. ALE covers costs for expenses such as hotel bills and restaurant bills accumulated over and above your usual living costs while you wait for your home to be rebuilt or repaired altogether.
Like all insurance policies, homeowners insurance is calculated in large part by the extent of coverage included in the plan. If you choose the maximum coverage in all of the above areas, you will be paying a higher monthly or yearly rate. With flexible plans, you can choose heavier coverage in one area in a lighter coverage in another, depending on your individual circumstances. (You can learn more about choosing your coverage plan in the next section.)
Another factor that goes in to calculating homeowners insurance is the cost of your home. More specifically, today’s homeowner’s insurance plans are based in large part of a home’s insurance value, which is calculated using the projected cost of rebuilding the home, not its market value. Protection for belongings is typically calculated using a percentage of your home insurance value. Most insurance plans protect belongings at somewhere between 50 to 75 percent of a home’s insurance value. So if your home has an insurance value of $240,000 and you’re belongings are insured for 75 percent of that value, you are insured for up to $180,000 in damaged or stolen belonging expenses.
Choosing Your Coverage
A big part of buying homeowners insurance is shopping around for a quote that fits your budget. But before you do that, you’ll want to determine just what, exactly, you want to pay for with your homeowners insurance. You should always try your best to choose a policy that reflects your lifestyle and the potential risks that come with your home. A lot of this is guesswork, but some of it is science. For instance, if you live in an area with particularly severe seasons, it may be a good idea to invest in a plan with more structural protection and ALE coverage than your neighbors in milder regions may have. The same goes for those homeowners with large families, pets, or other factors that may contribute to heightened risk in all of its many shapes and forms.
Once you’ve determined what kind of plan you’re looking for, you’ll want to shop around for quotes from various insurance agencies. Finding a quote that fits your budget and lifestyle is important in helping you make the right choice for your home and all those who inhabit it. You’ll also want to do some research on deductibles. In most cases, opting to pay a higher deductible will lower your monthly payments. Paying a lower deductible means you’ll be hit with a lower out-of-pocket payment in the event of an accident, but your monthly payments will also be higher.
Shopping for Insurance Agencies
In the world of homeowners insurance, there are thousands or insurance agencies and plans to choose from. You want to be sure to find one that fits right for you. Choosing a reputable company with a good rating and plan options to fit your needs will go a long way in saving you money and headache in the future. Take your time and look at several companies before buying, and be sure to ask about each company’s plans, discounts, and other policies when you shop.
Have Questions About Homeowners Insurance? Contact Us!
At Palm Desert Insurance, we are dedicated to providing high-quality insurance services to people in Palm Desert, CA and beyond. Whether you are looking to invest in one of our many great homeowners insurance plans, or simply looking to have a few of your questions answered, our insurance agents would love to help you out. Contact us at (760) 341-2345 to speak with an insurance agent today!