What Is Homeowners Insurance?

Homeowners insurance, also called home insurance, can cover loss, damage and liability that occurs on your home and property. Because homeowners insurance protects both you and your mortgage lender, your lender will want proof that you have purchased homeowners insurance before they give you a loan to purchase a home. They will also want to ensure you can cover repair bills after an incident occurs.

Homeowners insurance should cover the costs of your home in full. In the event of damage, you should have enough coverage to restore your home to its original value. Most standard policies also provide coverage for garages, sheds, outdoor grills, swing sets, fences, etc. High-risk items like swimming pools may require additional coverage.

Home buyers usually pay for homeowners insurance through an escrow account. When you make your monthly mortgage payments, a portion of your money goes into your escrow account to pay your homeowners insurance. This means you don’t have to pay your premium (your homeowners insurance payment) in a lump sum every year.

Look at many different insurance coverage options from a variety of insurance companies so you make sure you get the best rate for you. Compare the different types of coverage against the costs. Check out the reviews of each insurance company to learn more about customer service. Learn everything you can about each company you’re considering.

Take a look at some commonly asked questions regarding homeowners insurance.

How much is homeowners insurance?

Homeowners insurance cost depends on many factors, including the type of property you own, the condition and age of your home, what you want covered and the state you live in. Homeowners insurance costs also depend on your credit score (the higher your credit score, the lower your premiums may be) and the number of structures on your property. Your claims history also matters (if you’ve made a claim before, your insurance company may charge you more).

When you close on a home, you can check the cost of your homeowners insurance premium on your Closing Disclosure, which you’ll receive 3 business days before you close on your loan.

What’s the difference between homeowners insurance and a home warranty plan?

Homeowners insurance differs from a home warranty plan in that a home warranty plan covers your home’s systems and appliances, whereas a homeowners insurance covers disasters or accidents that damage your home.

How long does homeowners insurance last?

Homeowners insurance typically lasts a year but homeowners insurance often renews annually. Ask your insurance company for more information about how long your coverage lasts.

How do you lower your homeowners insurance cost?

Homeowners can lower their insurance costs by maintaining a good credit record, sticking with the same insurance companies, seeking out discounts and taking preventative measures, such as installing smoke and carbon monoxide detectors in your home. Some insurance companies may give you discounts for doing so.