House Insurance: What You Need to Know

Homeowners insurance is an insurance policy that lenders require borrowers to have on the property. Homeowners insurance typically covers the land, structures (house, garage) and sometimes outside buildings and personal contents.

If you have a mortgage, your lender will require that you have homeowners insurance, so that in case of a disaster like a fire, the lender's investment - your home - is protected. In most cases your homeowners insurance premiums are bundled in to your mortgage payment, and the lender's service department puts the money in escrow, then pays the house insurance for you once or twice each year.

You, as the homeowner, get to choose the company and the type of policy you use. For instance, a higher deductible can reduce the cost of house insurance. A deductible is the amount of money you spend before insurance kicks in - on a $5,000 roof repair from a tree falling on the roof, for instance, your deductible might be $1,000, with homeowners insurance covering the other $4,000.

Other choices homeowners can have include replacement value (receiving the actual cost to replace a home in case of disaster), personal contents, whether to buy flood insurance, and how to get discounts for such factors as fire alarms, house alarms, or sump pumps.

Homeowners insurance prices can vary; a home in Massachusetts may cost as little as $400 per year for complete coverage with a moderate deductible, while the same-sized home on the Gulf Coast of Mississippi might cost $2,000 per year or more. Areas prone to hurricanes, flooding, fires, or earthquakes may cost more than less disaster-prone regions.

For members of the military, having good, solid homeowners insurance is crucial, especially if you plan to leave the house empty at times, or plan to rent when moving away from an area for a different assignment. Military members can receive homeowners insurance by contacting us.