Buying a home means making a big financial investment. As a result, you’ll likely be required by your mortgage lender (if you financed the home) to purchase homeowners insurance. However, regardless of any requirements, you should never consider this benefit optional. After all, home insurance will provide the financial assistance that you need following any number of challenging incidents.
However, some people are apt to buy only the coverage mandated by their lender, given that this is often their cheapest policy option by comparison. Still, the cheapest coverage is often not the best cost value for you. By making a strategic investment in higher levels of home insurance, you’ll have more financial assistance available at critical moments. As a result, though more coverage might be a bit more expensive, it can often provide far more extensive benefits that are well worth the cost.
Understanding Home Insurance Pricing
Everyone has to pay a regular premium for their home insurance. However, though two property owners might buy identical policies, they might pay different prices for them.
Insurers base premiums on cost risks associated with offering coverage to individual policyholders. If you have a higher risk of filing a claim, or costing the insurer a lot of money, then you will pay more for your coverage. Numerous factors can influence your premium, including the location of the home, your claims history and, of course, the types and amounts of coverage included in the plan.
If you buy more coverage, then it is only natural that you will have to pay more for it. It’s simply a matter of supply and demand. However, by increasing your coverage, you are not likely to see astronomical price increases. Generally, by increasing coverage, you will only see proportionally incremental cost increases as opposed to the additional benefit you will be receiving.
With increased coverage, be it on your dwelling, possessions, liability or other benefits, you will have a guarantee of additional assistance in the event that you ever need to file a policy claim. Therefore, while the policy might be a bit more expensive up front, you will still have a promise of exceptional financial help if you ever need it.
Still, if you have cost concerns about your policy, don’t hesitate to work with your insurance agent to compare policies, apply discounts and fine-tune the terms of your coverage. They’ll make sure that whatever your premium winds up costing, it will always offer you the best value for your benefits.