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A home is much more than a structure. It’s a sanctuary from the hustle and bustle of life, a place where friends and family commune and share joys and pains. It’s something one should protect from normal wear and tear, plus accidents within and around the area.

This is the role homeowners’ insurance plays. Although the law doesn’t require home insurance, this smart investment is vital because it covers important areas like:

  • Repair of the house, yard, and other structures
  • Personal liability if the owner is deemed legally responsible for damage or injury to another person, or even a pet
  • Hotel or house rent while the home of the insured is being repaired or rebuilt

How much is enough?

The Information Insurance Institute advises getting at least $300,000 worth of insurance. An umbrella policy can provide an extra $1-million or more coverage for a  few hundred dollars more in premium.

Kinds of home insurance

HO-3 Insurance

This is the most popular one, and covers damage to the home for any reason except earthquakes or floods. The policy covers damage to belongings due to smoke, fire or lightning, windstorms and haul, explosions, riots, damage from aircraft, damage from vehicle, vandalism, theft, volcanic eruptions, falling objects, weight of ice, snow and sleet, water overflow or discharge from household systems, freezing of household systems, sudden damage from power surge, and sudden tearing, cracking or bulging of a hot water, steam, air conditioning or fire protective system.

A lender requires at least this kind of insurance on a mortgage.

HO-5 insurance

This has the broadest coverage since it pays for damage from all kinds of causes except those the policy specifies.

HO-1 and HO-2 insurance

This pays only for damage due to reasons stated in the policy

Choosing well

Insurance companies consider the following in deciding the cost of a  home insurance policy:

  • Credit score
  • Construction type
  • Home location
  • Fire-protection class
  • Construction costs
  • The home’s age

Here are tips for those looking for the right home insurance:

  • Get an umbrella policy

    This liability insurance policy offers high coverage limits. It acts as excess over two or more primary policies (e.g., homeowners, auto, watercraft, etc.). A primary policy isn’t enough if one is held liable for a huge loss (e.g., accidentally hitting a pedestrian in a crosswalk). Thus, the need for an umbrella policy.

    Consider a high deductible (an out-of-pocket portion the insured pays after a claim) to lower your premium. This lets the insurance company avoid small claims and associated claims investigation/settlement cost.  

  • Cover all bases

    Prioritize protection over price. Insure the home for replacement cost, not the cost of having the house built. Replacement costs cover expenses required to repair or rebuild the whole house, including construction cost.

    Look for loopholes. Homes in flood or earthquake prone areas are at risk because insurance plans usually exclude floods and earthquakes.

    Customize the policy by adding riders or endorsements that could amend the coverage.

  • Shop around

    Some homeowners prefer an agent. Others rely on the internet for insurance. Get quotes and study as many coverages, limits, premiums and deductibles as possible. 

Want to know more about choosing the right home insurance? If you plan to relocate to south central and southeastern Wisconsin, including the Metro Milwaukee area, let our team at Emmer Real Estate Group help you. Call us at 262.629.474 or 920.294.474, or email contactus(at)emmerrealestate(dotted)com.

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