The topic of homeowners insurance may seem overwhelming. It is important to educate yourself on homeowners insurance. Research different companies, shop rates, and compare coverage. Similarly, compare premiums and deductibles and read reviews! The least expensive company may not always be the best option.
What Is Homeowners Insurance
Homeowners insurance is a form of property insurance. A standard policy covers damage and losses to an individual’s home and personal belongings or assets inside the home. In the event of a natural disaster such as fire or flood, insurance will cover a percentage of the cost. In addition, homeowners insurance provides liability coverage in cases of accidental catastrophe. Proof of insurance is a requirement before your lender will issue any funds. According to Investopedia, the key takeaways are:
- Homeowners insurance is a form of property insurance that covers losses and damages to an individual’s house and assets in the home.
- The policy usually covers interior damage, exterior damage, loss or damage of personal assets, and injury that arises while on the property.
- Every homeowners insurance policy has a liability limit, which determines the amount of coverage the insured has should an unfortunate incident occur.
- Homeowners insurance should not be confused with a home warranty or with mortgage insurance.
Cost Of Homeowners Insurance
The average homeowners insurance cost in the United States in 2022 is $1,383 per year for a policy. This is based on a rate with $250,000 in dwelling coverage. Every policy will have a deductible. A deductible is the amount of out-of-pocket costs you’ll pay before your insurance company will pay on the claim. Insurance companies typically charge 1% of the home’s value. For a $600,000 house, your out-of-pocket cost would be $6,000.
It is estimated that 2 out of every 3 homes are underinsured. While only 1 out of 20 homes files a claim each year, it is imperative you have adequate coverage. The Colorado Springs real estate market is one of the hottest in the country. Home values are increasing by up to 20% each year. In other words, insurance coverage needs to be continually updated. A home bought in 2018 for $300,000 may very well be worth $500,000 in 2022. That home is now more expensive to replace and you could find yourself in quite the predicament if you are underinsured.
What Does Home Insurance Cover
Homeowners insurance covers external and internal damage to the home, as well as personal belongings and sustained injury. Depending on where you live, your policy will call for specific coverage based off damage that’s likely to occur. For instance, in Colorado Springs, we have a separate wind and hail deductible. It gets windy to the point of knocked down fences, broken off tree branches, and blown off roofs. Similarly, hail can result in severe damage to windows, roofs, and siding. Colorado is also notoriously dry, which puts us at high risk for fires.
Insurance companies are not in the business of losing money. They assess this risk and adjust premiums accordingly. Once upon a time, insurance companies only charged a $500 deductible for wind and hail damage. After so many claims being filed here in Colorado, they deemed us a high-risk state and modified deductible rates to 1% of the home’s value. If you have any questions about your coverage, please reach out to your insurance agent and review your policy and make sure it is up to date.
About The Author
The team at My Front Range Living are a group of full time real estate experts serving Colorado Springs, El Paso County and the surrounding areas. Their knowledge of the local community and experience in the industry provide you incomparable value when buying or selling a home. With several years of experience in helping out of state buyers and sellers, they are the go-to team when it comes to relocating and helping Colorado feel like home.
Even if you’re looking for an agent in another city or state, the My Front Range Living team has a network of experts that can connect you with the right professional.
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