5 Things to Know Before Buying Home Insurance

All lenders require you to purchase a homeowners insurance policy when you buy a home. That part’s simple enough to understand. But when you dig a little deeper into what home insurance is all about, it gets more complicated. Here are some things to keep in mind when it’s time to purchase a home insurance policy.

1. Coverage

The price of a home insurance policy will depend on how much coverage you buy for the house and personal property, as well as details such as where you live and what kinds of natural disasters you need to insure against. Better coverage costs more, but your out of pocket expense will be less in the event of a negative event. Your lender may require a particular amount of coverage.

2. Deductibles

The higher your deductible, the less your policy will cost. A deductible is how much out-of-pocket you need to pay when you file a claim. Is it more important to save on premiums, or would you be better off paying a lower deductible? You’ll need to weigh your choices.

3. Cash value vs. replacement cost

Cash value coverage pays for repairs or replacement up to the policy payout limits, minus depreciation. Although it costs less, cash value coverage will likely not cover a complete rebuild of your home or to replace personal items after a disaster.

Replacement coverage pays for repairs or property or possessions replacement up to policy limits without deducting for depreciation. This kind of coverage costs more, but it allows you to fully replace your losses.

4. Named vs. all risk peril

A named peril policy costs less than “all risk” peril insurance, but will only cover specific disasters listed on the policy. The fewer types of disasters included, the less expensive it will be.

All risk peril coverage pays for loss due to a disaster unless the disaster is specifically listed as an exclusion on the policy.

5. Discounts

A number of discounts are available, so ask your insurer what kinds the company offers. One example is a discount for purchasing multiple types of insurance, such as both home and auto. Taking safety measures is another example. Read  9 Ways You Can Save Money on Homeowners Insurance for more information.

These are just a few of the things you should consider before purchasing a home insurance policy. Your insurer can help you understand your options, and which are best for you. In the meantime, learn more about home insurance on the Einsurance website. You can also compare quotes from different providers using our online quote tool.