Home Insurance? Why?
First off! Thank you so much for taking time out of your busy day to check out this post. When working with my clients I get so many questions about home insurance. Who should I go with? Do I need it? What does it even do? My go to answer is.... talk to your insurance agent! I don't specialize in that field and so my answers might not give you all the questions, or even correctly answer them. So I took my own advice, I talked to an insurance salesman to get his answers to questions that I am commonly seeing.
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His name is Dante Chaparro and he works for the Insurance Agent Rigo Chaparro. They sell products from Statefarm. He is very educated in his field and has a very healthy outlook on business with a major focus taking care of his clientel. That's one of the reasons I chose to interview him with these questions. If you have any questions on insurance, I'll leave ways to get in contact with him at the end of this post.
The very first thing I asked Dante was,
"What is home insurance and what does it cover?"
Here is what I learned.
Home insurance is an insurance that is controversial. Some do not believe there is a need for home insurance. It's not like a car that has a high chance of crashing and sustaining damage. I asked Dante if he felt it was necessary and he said that he would not want his most valuable asset to not be covered. Though the chances of making a claim are low, if some event were to happen, it could protect hundred of thousands of dollars.
It's job is to protect your home. To name a few things it could cover.
and more. (check with your chosen provider to see your coverage)
Dante also explained there are two amounts you could cover on your home. Home insurance is only required when you have a mortgage on the property. That is the rules of almost all lenders(it is to protect their investment in your property). So if you don't have a loan you do not need insurance (though he suggest you still get it). Coverage changes depending if you want to insure the amount that you owe on the home, or you could get full coverage for the worth of your home. Which should you get? Well if your house were to burn down do you want to just be able to get out of your mortgage or do you want to be able to get into another home? That's how you should decide your coverage.
Dante also further explained that you should also understand your deductible with your insurance. If you have $1000 deducible, that means no matter what claim you make (even if it is less than $1000) then you will be paying that full deductible.
My next question to Dante was
"What is the cost for home insurance?"
He stated that it varies depending on the home, location, age , type of home and more. There are many variables that affect your cost. Is it in a flood zone? Is it older and more prone to accidents? Is it a more expensive home? He stated on average in Box Elder you're looking at around $800 but he has seen it as low as $400 and so far as high as $1200. (though it can go higher if you are talking about high end homes.) So a good middle ground is planning around $800 with your home payment.
I also asked for him to clarify what the difference is between mortgage insurance and home insurance. (yes, they are very different)
Mortgage Insurance is insurance for your lender so they are covered if you do not pay your mortgage. Mortgage Insurance is for your Mortgage Company
Home insurance is for you (the home owner) and the home. It protects you against multiple type of accidents or malfunctions that could happen to your home. It protects your wallet. Home Insurance is for the Home Owner
Finally I asked him, "How do you choose a Home Insurance Company?"
He gave me an interesting answer. First he stated that if you could bundle with the company that has your cars or insures you in other ways, you could save a lot of money. So check them first and see what rates you get from bundling. He also says to choose a company that has a good relationship with your mortgage company, and he said choose a good mortgage company. Here's why. Your mortgage company will be the one that is making your payments to the insurance company (they include it as your payments on the home) Some mortgage companies want you to use their insurance company and they wont make payments to the insurance company and your coverage will lapse and you could be forced into a more expensive company or one with worse coverage. So choose a great mortgage company and that will help you in choosing a well priced and reputable insurance company.
Those were the main points that I felt I was asked about Home Insurance. If you have any further questions reach out to Dante to get more information. He also does Car insurance, Rental insurance, Commerical insurance, Life insurance, and more. Contact him by texting (435)770-9010.
If you want home insurance from him bring your loan number and mortgagee clause or have your lender send him and EOI.
I hope this was educational and helped further your knowledge on home insurance. Should you get it? That's up to you! But for most home owners it is required and hopefully this helped you understand it's full purpose.
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