Purchasing a home is one of the largest investments most of us will ever make. Therefore, making sure your investment is insured properly is very important.
There are several different forms of homeowners insurance policies to choose from. You'll want to be sure that you select the best protection available. Be sure that you have an all risk policy, not a named peril policy. The all risk policy covers all sudden & accidental losses to your dwelling unless it is something that is specifically excluded. Some of the typical exclusions are flooding and earthquakes.
Your homeowners policy should provide replacement cost coverage as well as an inflation guard provision that will allow for payment over the policy limits in the event of a total loss. The homeowners policy will also cover your personal belongings. Again, you will want to be sure that you have replacement cost coverage and not actual cash value, which means there would be a deduction for depreciation. The homeowners policies also include liability protection and guest medical coverage.
Also, you need to read the policy to verify what items may be limited or excluded. You may need to secure additional coverage for items such as jewelry, watches, furs, guns, computers, fine arts or business property.
Recently, many companies doing business in Louisiana have added hurricane deductibles to their policies. This is very important and you should be aware of this deductible, since it could be as high as 2% of the dwelling coverage limit.
There are several discounts that can help reduce the homeowners premium. For example, retired discounts, multi policy discounts, protective device discounts, and new house discounts. Be sure that you are receiving all discounts that are applicable.
Homeowners premiums are determined based on the fire district where the property is located. The amount of coverage is determined based on the replacement cost of the dwelling. Your insurance agent will need to know things like the square footage of living area, age of the dwelling, number of baths, carports/garages, number of fireplaces, outdoor buildings, pools or decks to calculate the replacement cost.
Don't wait until time for closing to select your homeowners insurance company. Give yourself time to shop for the best policy. Additionally, most companies have underwriting guidelines which must be met before writing the policy.
Remember, that flooding is excluded by the homeowners insurance policy. You may want to consider purchasing a flood insurance policy so that you are protected in the event of a flood loss. Also, your mortgage lender may require that you carry flood insurance coverage.