When I first bought my house, I wish someone had explained the different types of insurance and what to look for. Instead, I just followed a referral and hoped for the best. In today's video, I'll share the top five things you need to know about home insurance.
Hey everyone, I'm Mark Flockhart. If you're new here, this channel covers all types of insurance, including home and auto, and offers tips to help you get the best rates. If that sounds interesting, consider subscribing. I've also included detailed notes below so you can read along.
According to the National Association of Insurance Commissioners, the average cost of home insurance is $1,192 per year. However, prices vary by state. For example, in states like Kansas, Florida, Texas, and Louisiana, premiums can be $1,500 to $2,000 per year due to higher risks. In Michigan, where I live, the average is about $1,200 per year, but it can be as low as $600 or as high as $1,500, depending on various factors.
Several factors affect home insurance costs, including location, age of the home, and response time for emergency services. For instance, homes in the city might have lower premiums due to quicker fire department response times, whereas rural homes might have higher premiums because of longer response times.
Another significant factor is the age of the home. Older homes are riskier because their infrastructure, like plumbing, may not be updated. This increases the likelihood of claims.
Your deductible also plays a crucial role. The most common deductible is $1,000, meaning you'll pay the first $1,000 of a claim out-of-pocket, and your insurance will cover the rest. There are two types of deductibles: all-perils and wind and hail. All-perils cover most events except wind and hail, which have a separate deductible.
Replacement cost coverage is essential. It ensures you receive the current market value for damaged items, not their depreciated value. This means if your TV, which cost $1,000 five years ago, is destroyed, you'll receive enough money to buy a similar model today, not just its depreciated value.
Coverage D, loss of use, covers living expenses if you need to move out during repairs. Coverage E, personal liability, protects you if someone sues you for injuries sustained on your property or elsewhere. Coverage F, medical payments, covers medical expenses for guests injured in your home.
Understanding your coverage values is crucial. Coverage A is the dwelling coverage, the cost to rebuild your home. Coverage B covers other structures like sheds or fences. Coverage C covers personal property. Coverage D is loss of use, Coverage E is personal liability, and Coverage F is medical payments.
Don't just accept referrals from realtors or mortgage brokers without doing your own research. They might refer you to someone they barely know. Instead, Google the insurance agent or company, read reviews, and compare policies.
Lastly, consider bundling your home and auto insurance. Bundling can save you 20-30% on premiums. Even if it costs a bit more, having a reliable agent who can help during claims is invaluable.
To recap, here are some discounts to look for:
- First-time homebuyer
- Updated roof, electrical, plumbing, or heating
- Going paperless or paying in full
- Being part of an affinity group like a credit union or AAA
- High credit score
- Early shopper discount
- Non-smoker discount
- Security systems, especially those notifying police or fire stations
- Smart home devices
- Hail-resistant roof or storm shutters
If you found this helpful, please let me know in the comments, and don't forget to subscribe for more insurance tips and tricks!
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