Homeowner’s Insurance – What do you know?

Insurance: what is it and do I need it when I own or buy a home?  Some people confuse homeowner’s insurance with a home warranty.  Insurance is not going to fix your furnace when it dies or replace your stove when it won’t heat anymore.  Insurance covers your home against perils, that is fire, snow, hail, wind, water, theft, vandalism, etc.  So, yes you do want to be sure to have insurance for your home and you will be required to have it if you have a mortgage that financed the purchase of your home. 

The first step to the insurance process is to ensure you have a knowledgeable professional assisting you with your insurance needs.  They need to be able to answer all of your questions and concerns for your personal property as well as your home.  Having an insurance professional that works for a broker is a very good option as it will allow them to “shop” for the best insurance rates for you.  Each insurance company offers different coverages and rates and a broker can offer you multiple choices versus an insurance professional that works directly for only one insurance company.  

Premiums: what affects the cost you pay for your insurance?  There are actually six factors that can play a part in this yearly cost.  

1. Credit score – yes the higher your credit score, the lower your premium cost is going to be.
2. Age of your home – this comes into play because the older a home, the more an insurance company feels will go wrong with that home, like older pipes, older electrical, etc.  This all equals more risk for them. 
3. Location of your home – the location plays a role as to where the home is located in relation to a fire hydrant or fire house – this is called your protection class and is based on a level from 1 to 10.  On average most homes are a “3” and the highest normally will be a “9” with a “10” being something much too far from either, creating such a risk that an insurance company may not agree to cover the home at all. 
4. Home features – this goes back to the risk for the insurance company again.  So if a home has features they consider a higher risk like a pool, wood stove, trampoline, they will increase the premium to accommodate them for this risk. 
5. Animals that reside in your home – Dogs, in particular, can cause an insurance company to decline coverage altogether or at a much higher premium.  Most insurance companies have a list of dog breeds that they do not allow. 
6. Education – yes, you actually get a discount for that masters degree you earned.  The higher your education, the more of a discount you can get from an insurance company. Not sure I understand this one myself, but I do like a discount. 

Most insurance companies will complete a home inspection after obtaining the insurance coverage with them.  This is to assess the home for any risks or hazards like cracks in sidewalks, missing siding, missing shingles, etc.  Keep this in mind when you are shopping for insurance and know that you will be provided a timeframe to complete the repairs to continue coverage. 

This week I collaborated with Jolie Loring, an Insurance Advisor with McNamara Financial in York, PA.  Jolie is a professional we work with often due to her diligence and knowledge that she exhibits with each client we send her.  We cannot stress more the importance of having a strong team of professionals working for you.  We have established many of these relationships over the years so that we can assist buyers, sellers and homeowners. 
If you think you would like to have your insurance needs reviewed, you should reach out to Jolie.  She can be reached by email at jolie@mcnamarafinancial.net OR by telephone at 717-781-2933.  She has saved our clients and myself thousands of dollars over the years.