House fires happen -- an average of about 357,000 per year -- and when they do the home and just about everything inside are damaged or destroyed. Without homeowners insurance to cover the cost of repair and replacement, the homeowner loses hundreds of thousands of dollars effectively overnight. Therefore, having homeowners insurance is probably one of the most important policies you can have.
Homeowners insurance gives you peace of mind by financially protecting you against many of life's unforeseen and costly mishaps.
Insurance is a form of risk management. The insured — in this case the homeowner — pays an insurance company a certain amount of money a year, called the premium, in order to transfer the cost of potential loss because of death, injury, fire, etc. The insurance protects the homeowner against the financial hardship that would be caused by any losses.
Legally you're not required to take out homeowners insurance, but mortgage companies won't give you a home loan if you don't. Many require that borrowers purchase a policy that at least covers what is owed on the property. Besides, it is in your best interest to obtain a homeowners insurance policy.
You'll have to factor in the cost of your insurance policy along with your mortgage payments and taxes to make sure that you can afford the house you'd like to buy. Shop around for the best coverage and cost, and compare the rates from a variety of different companies.
There are four main things that a basic homeowners policy covers -- the structure of your home, personal belongings, personal liability and additional living expenses.
A homeowners policy can be one of three different types of coverage -- actual cash value, replacement cost, guaranteed or extended replacement cost.
To get the best combination of insurance premiums and coverage you'll have to shop around and make comparisons. Your credit history even can affect what rates you pay. The average homeowners insurance premium costs about $950 although costs can vary widely depending on the state.
Chris Birk, author of VA Loans Insider, writes that shopping around for a policy will save you money and stresses that it's important to compare the same type of policy across companies.
"Don't just look at the bottom line," he writes. "Make sure you’re comparing the same type and scope of coverage on each policy, with the same deductibles and other important information. Your current insurer may be able to offer discounts if you use them for both auto and home insurance."
"Get quotes from multiple companies," he continues. "Evaluate them closely, and as long as you’re comparing apples to apples in terms of the policies, go with your gut, whether that’s the cheapest or the reputation of the insurer or some other factor that’s important to you."
Your loan officer can also be a great source to assist you in your search and can offer recommendations for insurance companies.
You can talk with a loan specialist at 855-870-8845 or visit Veterans United online.
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