Things to Consider When Shopping for Cheap Home Insurance
With the current economic situation many people are struggling to stay in their homes, and the last thing they want to do is pay too much for home insurance. If you don’t own your home outright and you have a mortgage, then the bank requires that you have homeowner’s insurance. They require this insurance to protect THEM in the event of a loss. You should be concerned about your loss, even if you only want cheap home insurance.
Homeowner’s insurance is an extremely vast subject. There are many different types of home insurance policies and different items to consider. For this piece we are only going to outline some of the basics and give you some items to consider.
First off, with home insurance there are some abbreviations you should be aware of. They range from HO-1 to HO-8. I don’t think this has to do with Santa Clause, HO is for Home Owner.
HO1
Is the most basic form of homeowner’s insurance. If your sole goal is to purchase cheap home insurance, HO1 is what you’re looking for. HO1 covers your basic threats such as fire, wind, theft, wind, hail, social unrest, etc. It does not cover damage from floods or earthquakes. Not all states offer HO1, so you need to check about your specific state requirements.
HO2
This is a more comprehensive form of home insurance. It covers everything that HO1 does plus added perils. HO2 policies usually outline specific perils they will cover which may include damage from falling objects, ice and flooding due to faulty plumbing.
HO3
HO3 is the most common form of home insurance in the Unite States. It protects against anything that is not specifically excluded. Items within the home are covered on a per peril basis, and the home itself is covered unless there is a exclusion, such as earthquakes. Common exclusions are floods, earthquakes and wars.
HO4
HO4 is not technically home insurance, it’s renter’s insurance. It provides protection for a renter’s personal property.
HO5
Commonly referred to as Premier Homeowner’s Insurance, HO5 covers everything that HO3 does and covers all home contents unless they are specifically excluded.
HO6
HO6 is for owners of condominiums.
HO7
This is for mobile homeowner’s and is similar to HO3.
HO8
HO8 is the policy of choice for classic old homes. Many times a classic home is worth much more than the “replacement value.” An HO8 policy will provide the real cash value of an owner occupied old home.
Now that we got some of the terms out of the way we can get on to the cheap home insurance. As you can see by reading through the policy abbreviations there is a lot to consider when shopping for home insurance. If you have a mortgage we recommend that you determine the minimum coverage you are required to carry. Your next step is to consider your budget and risks.
The key thing to remember when it comes to home insurance is what you will lose in the event of a total loss. If you have extremely expensive electronics or expensive artwork in your home you will want to make sure that they are covered. It could be a disaster to lose a couple hundred thousand dollars worth of paintings just because you wanted to save a few dollars on your monthly premiums.
Most of these home insurance policies protect the homeowner from certain liabilities in the event that a person is injured as a result of the homeowner or an accident occurs on the property. It is a good idea to determine what risks your property poses, and make sure you have proper liability coverage. If your home does not have a fence and is close to a school you may want to increase your liability coverage. Another option is to purchase an umbrella policy, which can give you added liability insurance for both your home and car insurance.
As with all insurance policies, home insurance has a deductible, which is the amount of money you are responsible for before a claim is paid. In general, the higher the insurance deductible, the lower your monthly premiums. We recommend that you settle on a deductible you can cover then receive home insurance quotes from multiple carriers. Once you find the cheapest home insurance be sure to discuss all your concerns with your insurance agent.