Talking With Insurance Companies

Owning a home presents you with all sorts of new and unfamiliar scenarios. As a first-time homeowner, one of the situations you'll encounter is having to buy homeowners insurance. Usually, you purchase a policy mid-way through the sales process, before you even move into a home. This step catches some people off-guard, and it often leaves them with the following questions. 

What does homeowners insurance actually cover?

Homeowners insurance policies typically include two different types of coverage. The first is coverage for the home itself. If the home becomes damaged due to a natural disaster or natural causes, the policy will pay for the repairs. For instance, if a storm blows through town and drops a branch on your roof, the policy will pay to have the branch removed and your roof repaired. The second type of coverage protects people who visit your home. If they become injured on your property, the homeowners insurance will pay their medical bills. For example, if someone falls on your stairs and breaks their arm, the insurance will pay for their doctor's visit and related costs.

Do you have to have homeowners insurance? 

If you have a mortgage on the home, then yes, you have to have homeowners insurance. Banks require it and will terminate your mortgage if you do not purchase homeowners insurance. If you do not have a mortgage on your home, then legally, you can go without homeowners insurance. However, doing so is not wise. You could be hit with huge repair bills or medical bills if you don't have coverage.

When do you pay for homeowners insurance?

Usually, your mortgage company will collect the fee for your homeowners insurance monthly. It will be wrapped into the payment you refer to as your "mortgage payment." When the insurance comes due, which is usually once or twice a year depending on the company, the mortgage company will pay your insurance company. This whole process is known as escrow. 

If you would rather pay for your homeowners insurance on your own, rather than using your mortgage company's escrow service, you can do so. Just let your mortgage company know, and make sure you set aside money to make those payments.

Hopefully the answers to these questions have helped you learn a bit more about homeowners insurance. If you have any other questions, talk to your real estate agent. They are often experts on this topic.

Contact an agent to learn more about home insurance coverage.