A Guide to Homeowner's Insurance

When buying a home, many people who have only rented are surprised to learn they need to purchase home insurance. Technically, there are some cases where you don’t need to purchase a policy, but the majority of lenders require individuals to have insurance as long as they hold the mortgage.

Besides, your home is probably the single most important investment you have. It would be ridiculous not to protect it and all the assets you have tied up in it by not taking out a policy.

Whether you’ve had home insurance for a few decades or are just looking into a policy, here are five things you should consider.

How much coverage do you need? This is a big question. The better coverage you have, the lower your deductibles and the better position you’ll be in should anything go wrong. However, this also means you’ll pay a higher amount each month. Don’t try to get away with the cheapest policy possible. In making this decision you need to be sure you will be able to pay the deductible.

Actual value vs. replacement cost. Most policies have the option to insure your home and your belongings for actual cash value or the replacement cost. The fine difference here is that cash value is how much it would take to replace or repair items or your home after factoring in depreciation. The replacement cost is the amount without deducting for depreciation. The older your house, the greater the depreciation. This means the older your house, the smarter it is to go for the replacement cost option.

Combine policies for a deal. If you take out your automobile insurance with the same company, they can often give you a discount. Talk to your insurance agent and use this as a means to negotiate.

Know what you are protected against. Each policy protects against specific types of damage and specific events that can damage your property. If you’re protected against fire but not flooding you may be out of luck if your home floods. Be sure you know your home, know what kind of hazards may damage it and be sure you are adequately protected!

Review and update your policy each year. Things change, and you make home repairs and buy new appliances. Keep your policy current by talking to your agent each year and making changes where necessary.   

To learn more about the home-buying process, talk to a Coldwell Banker Hedges Realtor® today. Along with knowing plenty of tips and secrets, they know the Cedar Rapids market and can help you find an amazing home.


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