Home insurance quotes can be a confusing topic especially for first-time home buyers but are actually fairly straight forward. Actually, the trick is to read your policy, which most do not do. With home insurance quotes, it is not so much what is covered; it is what is not covered.
For first-time home buyers looking for home insurance quotes, there are plenty of incentives and discounts available due to fierce competition among the insurance companies. This article will look at some of the basic things you need to understand as a first-time home owner to take advantage of the lower rates and incentives targeted to first-timers.
In the 1950, insurance companies decided to offer a comprehensive all-in-one policy that would cover a house, any outbuildings and contents of the property, as well as any liability, and thus, home insurance was born. The standard home policy has two components: property insurance and liability insurance.
Liability covers any damages that your home or property causes to another person or another person’s property. In other words, if a tree on your property fell on someone’s car or if someone falls down your front steps, liability insurance would cover it.
Property insurance covers the damages to your property, including any outbuildings, from damages caused by a covered disaster. This includes such things as a fire and most other natural disasters, but generally excludes earthquake and flooding.
There are several different types of home insurance available for home buyers most labeled with an “HO.” Each type has different rates, and coverage can vary greatly from one to the next. The most popular is called HO-3 and includes just about everything you may need the policy to cover.
There are really only two types of home insurance coverage amounts to be concerned with, actual value and replacement value. Make sure that any home insurance quotes you get cover what you need. A great price on a policy is not very good if you are under-insured.
The more expensive of the two is replacement value coverage. Replacement coverage allows you to replace or repair your property at the current rate. For instance a television purchased three years ago for $500 may have a current value of $100, although it would cost $700 to replace it. A replacement value policy would allow the full cost of replacement rather than the depreciated value. An actual value home insurance policy only covers the depreciated value of the television, which in this case could be as little as $100.00.
This is also true for the house itself. Replacement value insurance will cover the current cost to rebuild the home rather than the value of the home minus land.