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Wednesday, July 25, 2018

By Amy Graham


Anyone getting a new home loan has to take out an insurance policy, and keep it active for the life of the loan. This protects the lender in the event that the house is damaged in such a way that it adversely affects their investment. It's protection for the homeowner as well. Even though insuring the property is a significant amount of money, not all home buyers fully understand what is included in the homeowners insurance quote Tucson AZ insurers give to them.

There are different kinds of policies. If your agent quoted you a price for a HO-3 policy, he was giving you a number based on the most common coverage. This covers you for what insurers call open perils. Open perils are things like fire, tornadoes, and theft. The policy will cover real as well as personal property. Not all peril is covered however. If you have damage caused by an event not included in your policy, you're out of luck. HO-5 is more expensive, but is worth the extra money if you have valuable assets.

You should understand how much your insurer will pay when it approves a claim you make. A cash value policy pays the cost of repairing or replacing the property, after depreciation is figured and deducted, up to the coverage limit. This is your least expensive option, but it doesn't generally cover the cost of a complete rebuild.

A replacement cost policy is more expensive but doesn't deduct for depreciation. Extended or guaranteed policies replace property regardless of the policy limits. You don't want to add land value to a homeowner policy. It will increase your payments for no reason.

There are certain types of damage a standard policy does not cover. Tornadoes, windstorms, and hurricanes are normally covered. If you live in an earthquake prone area, you may have to add that coverage to your policy. Homeowners policies do not include flood damage. This is a separate policy altogether you need to discuss with your agent.

The better your credit is the better rates you will get. When you have average credit, you'll probably have to pay thirty plus percent more than someone with excellent credit. Policy holders with poor credit will pay twice as much as those with the highest ratings. Checking your credit, and correcting any mistakes, before talking to an agent may save you a substantial sum.

Filing a frivolous claim will hurt you with the insurer. They all track client claims and share the information with each other. They can keep the records for seven years. After filing one claim you may see your annual premium increase by almost ten percent.

Insuring your home is not cheap, but going without insurance could be catastrophic. You can reduce the annual premiums. Making improvements that save costs is one way to do it. Not buying more coverage than you need is another. You should know what protection you really have before you find out too late you aren't covered for something.




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