Buying a house is one of the biggest purchases you’ll
make—and you probably want to make sure it’s insured accordingly.
Home insurance in
(1) It protects you from legal damages if someone is injured on your property
(2) It protects you from financial losses if your home and/or possessions are damaged or destroyed
Many mortgage lenders require that you have some form of home insurance in order to protect their investment. According to the Insurance Information Institute (I.I.I) there are two main types of home insurance policies.
HO-2 is a basic policy protects you against 16 different perils including:
An HO-3 policy covers you from “all” perils, except for those named in the policy. Common exclusions from HO-3 policies include:
Important note: Home insurance does not protect
you from flood damage. If you’re interested in purchasing flood coverage, make
sure you ask your
In addition to these types of policies, there are also two main types of coverage. These coverages are known as actual cash value, and replacement cost.
Actual cash value: Pays to
replace your items minus a deduction for depreciation, up to your policy amount.
This means if you bought your laptop two years ago for $1,000, the insurer will only reimburse you for its worth at the time of damage—which could be a several hundred dollar difference
Replacement cost: Pays the actual cost of your possessions with no deduction for depreciation, up to your policy amount.
This means no matter when you
bought your laptop, you’ll be reimbursed for the amount you paid for
Because replacement cost coverage doesn’t deduct any money for depreciation, it’s generally the best coverage for your bottom dollar and comes highly recommended by insurance experts.
Saving Money on Minnesota Home Insurance
While finding a good policy is important, there are a few ways you can keep your costs down:
Shop around. Prices differ
from one insurer to the next, so comparing free quotes is the way to go. Free
shopping sites like InsureMe.com allow you to compare multiple quotes from local
agents in your area.
Increase your deductible. Increasing the amount you pay for a claim out-of-pocket (before the insurer starts paying) automatically lowers your premiums. Just make sure you choose a deductible you can afford in case you have to file a claim.
Ask about discounts. Many insurers offer significant discounts if you have a home alarm system or insure your car with the same company. Ask your agent what other discounts they offer and see if you qualify.
Make some home improvements. Updating your home or making improvements can help your home better withstand tumultuous weather. Your insurer will take this into consideration while determining your premium.
If you own a home, home insurance is a fact of life. And
thankfully, the web makes it easy to find the coverage you need. Get started
with InsureMe.com and compare free