A home purchase involves several significant decisions, including homeowners insurance to protect your property from unexpected financial risk or loss. Homeowners insurance can cover the costs of damages and losses resulting from burglary, fire or other unforeseen incidents. Homeowners insurance covers your home, as well as your possessions inside it. Following are a few common terms:
Premium is the amount you’re required to pay your insurer for a specific amount of time for your insurance policy. This payment might be due all at once or it can be divided and paid in increments, such as monthly.
Deductible is the amount you must pay before your insurance coverage begins. This payment is made in addition to the regular price of your premium.
Keep in mind that homeowners insurance is intended to repair or replace your home if a covered event occurs. But inflation can cause the prices of materials to rise, and new building codes that have taken effect since your home was built can increase the costs of rebuilding. Make sure your homeowner’s coverage will replace your home at today’s costs.
Insurance is not a set it and forget it decision. You’ll want to re-evaluate your needs on a regular basis or during major life events such as a new job, moving to a new area or the birth of a child.
