Buying a home can be a difficult and long process. Once you finally buy your home and move in, it’s only natural that you want to protect your home, to make sure that you can fix any damage it sustains in inclement weather or accidents. To accomplish that, you will need to invest in homeowner’s insurance.
Evaluating Your Need for Insurance
But how much homeowner’s insurance do you need, and what kind of insurance is right for you? These are questions that you may have some trouble with since homeowner’s insurance is so complex
To begin with, do you even need to own insurance? Is there a law stating you must? Actually, there is no law in Colorado stating that you must have insurance covering your home. However, not having insurance to cover your home can leave you in a terrible position in the event of catastrophic damage. What if you need a roof replacement or something even more drastic? You likely won’t have the money on hand to be able to rebuild.
If your home is currently mortgaged, usually there will be some requirement that you carry a certain amount of insurance. This is to protect the lender who provided you with the mortgage, to make sure that there’s a minimal amount of risk that they will end up losing the money invested. If they demand you carry insurance, they will also tell you what that insurance must be and what it must cover, and to what degree it must cover it.
If you’re searching for a homeowner’s insurance policy, a good place to begin your search for the best insurance for your particular wants and needs is an insurance broker. An insurance broker is someone who can help you to find the best insurance for your particular needs. Unlike an insurance agent, the broker does not work for or usually have contractual agreements with, an insurance company. Think of them as the go-between for the purchase of insurance between you and the insurance companies. An insurance broker usually gets paid a commission on the insurance they sell. Having a broker to help figure out what insurance is best for you is a great way to make sure your insurance matches your needs. Working with such a professional can even help to ensure that you will end up with a better deal on your insurance policy.
Finding Insurance on Your Own
What if you want to find insurance on your own? If that’s the case, you’re going to want to insure for at least the cost of rebuilding the structure. If something catastrophic happens, you will want to be able to rebuild the house itself. Of course, that doesn’t mean that you’re ensuring for the entire value of your property. In the event that a storm or fire totals your home, the plumbing, the sewage system, and even the actual property on which the house rests are likely to still be in good condition. So, rebuilding a house on a piece of real estate that cost half a million dollars to purchase is not going to take half a million dollars in most cases.
You will also want to look into covering the contents of your house, which may be as expensive as the value of the house itself. Imagine having to pay not only the deductible on the replacement of your home, but also having to buy all new furniture and appliances out of pocket, and you’ll see why insuring the contents of your home is such a good idea.
You may also want to have coverage for the cost of your temporary housing in the event that your house needs extensive
home repairs. You’ll want to stay in a hotel, or maybe even in an apartment or rented house, while your home is undergoing repairs, and depending on how long repairs take, you can find those costs add up quickly. The cost may not be as extreme as the cost of replacing a home and its contents, but it can still add insult to injury. Depending on what you’re looking to spend on your insurance premiums, getting insurance to cover temporary housing might be of interest to you.
This is just a very basic idea of what you will want out of your insurance if you want insurance at all. Working with an insurance broker will provide you with more information about what policy may fit your desires and your budget, and a good broker will even be able to help better tailor a policy to your desires (within reason, of course). While I would not recommend it, you can even decide to carry no insurance at all. Whatever the choice, it would be wise to do your research and to make sure you understand what your policy does and doesn’t cover, and to what extent it covers your home and contents.
