Do you need to learn the Home Owners Insurance basics?

Most people realize that you need to get insurance when you own a home. To get insurance, most people just call an insurance agent and say they’re buying a house. and they need insurance. The agent then asks number of questions about the property. At that time, the agent says it’s going to cost you this much. And, because most people are not educated about home owners insurance, they usually say okay.

However, it could be a little more complicated.

There are two most prevalent types that we will run across in our area of the country. First, we’ll talk about insurance for a condo or a townhouse.

When you purchase a home with condo style ownership you own the exterior walls halfway through and the association owns the exterior walls halfway out. In addition, there are walls that separate your home from the homes it is joined to. These walls can be to either side, behind, above or below. You also own those walls halfway into the center and someone else owns the other half of that wall. As a result, you own the inside of your unit, someone else owns the other side(s).

Now, let’s discuss what happens in a worst-case scenario. For example, God forbid, a fire totally guts the building. The condo association’s insurance will take care of repairs to the extent of what they are liable to cover. And that would be the exterior of the building, the roof, the sheathing and half of the two-by-fours that go up. You, as the homeowner, are responsible for the remainder. By that, I mean the insulation, sheet rock and paint. And if you don’t have insurance, you really don’t want to know what’s going to happen here. But you need to know.

It would also be your responsibility to repair /replace things, such as ceiling lighting fixtures, plumbing, electrical systems, heating ventilation systems, appliances, cabinets and much more. In addition, there’s your personal property. Your clothing, furniture, electronics and more. So I think you’ll agree that you need insurance.

When you apply for home owners insurance on a condo, the agent will typically quote the standard amount of insurance. The last time I checked the standard was $10,000 to cover everything on the inside. Do you think $10,000 will cover your damages and losses? I doubt that it would be near enough. Getting additional insurance coverage isn’t that expensive. Speak with your agent, go over what’s inside the condo in addition to your personal property.

Next, let’s discuss a single family home. With a home you have to worry about the entire house. In fact, everything on the inside and the outside is your responsibility. The homeowners policy is actually a little bit simpler for a detached home. The agent will speak with you and ask questions about the building. Typical questions they’ll ask are about the square footage and how many rooms. In addition, what type of finishes are on the floors, wallpaper, what the appliances are etc etc etc. After entering the info into a computer program, they’ll come up with a number which will cover replacement in case of a worst-case scenario. As to your personal property, a percentage of the home replacement value is the maximum payable. And for many, this is a sufficient amount. However, if you have many valuable items, such as jewelry, antiques and artwork, you may need extra coverage. And, additional home owners insurance coverage isn’t really all that expensive.

As with any major purchase, I shop around. Think about speaking with 2 -3 different insurance companies to compare prices. And, here’s one last thing about insurance. By having your home owners and your auto insurance with the same company, you’ll probably get a break on the homeowners insurance.

Standard Disclaimer – I’m not an insurance agent, not do I play one on TV, I’m not licensed to sell home owners insurance. If you have questions, please address them to someone who is licensed to sell insurance.

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