Choosing Excellent Insurance Coverage

3 Reasons People Get Homeowner's Insurance

Folks with homeowner's insurances policies never want to be in circumstances for them to have to be used. There are, however, a number of situations where it's simply wise to have one in place. Let's take a look at three of the most common reasons people elect to get homeowner's insurance plans.

1. It's Required for a Mortgage

When the bank loans you money to buy a house, they do so with the understanding that the house itself is collateral for the loan. In setting up a mortgage, the bank also wants to know that its collateral will be properly protected against predictable, but low-probability adverse events. They don't want to find out that they gave you free money in exchange for a building that was ultimately leveled by an earthquake, for example. Having a policy in place protects their investment, and it also ensures that your credit will be safe if a catastrophe hits.

2. Preserving Your Investment

Even if you don't plan to immediately access the equity you have tied up in a home, you likely want to preserve that value for the day you need it. Many people account for the values of their houses in their financial planning efforts, and it's good to know that insurance will be there to cover things that might negatively influence the value of a critical asset. If a tree goes through the roof, for example, you want to know there will be quick money there to fix your house.

It's a good idea to understand how different homeowner's insurance plans fit into such a scheme. In particular, opting to go with replacement cost basis for paying damages rather than actual cash value can ensure that you pay a lower premium. Conversely, going with an actual cash value basis can protect you when you are getting ready to sell a house.

3. What's Inside Your Home?

Homeowner's insurance policies typically extend to more than just the value of a house. It's nice to know that the giant new TV you bought, for example, will be covered if a storm wrecks your place.

Some policies even extend to replacing items that are stolen, and they can even travel with you. That means your kid's shiny new tablet for school can be replaced if someone takes it. Similarly, liability insurance can provide you with protection against a lawsuit if someone slips on the sidewalk out front. For more information, contact a company like ALTRE Insurance Agency Inc.