Home ownership is considered by many to be the foundation of personal wealth. In fact, owning a home is probably one of the biggest financial dividing lines between those who are somewhat financially independent and those who are not. Of course, with home ownership comes great responsibility, as well, including keeping up with the mortgage payments and maintaining California homeowners insurance coverage on the property. This is an essential part of home ownership that is not only required by the lender but is also very important if there is some disaster that affects the property itself. Most people do not have the money to pay for extreme damage to a home, so homeowner’s insurance covers the costs of major problems with the property.
If you finance your home, as most people do, your lender will require some form of proof of homeowners insurance before funding your loan. In addition, you must be able to show the lender at any time that your home is covered by insurance the entire time it is financed. Just to be sure this critical step is carried out, many lenders collect the homeowner’s insurance premiums from the borrower in the form of escrow to be applied to future premium payments. This means that if you normally pay $1,000 per month on your mortgage, your lender may actually bill you $1,250 per month, with $250 to be applied to taxes and insurance coverage. In this way, the lender knows that the property is not in danger of being destroyed with no way of rebuilding or of having a levy placed against it for non-payment of taxes.
However, if you own your home outright, it is up to you to pay for your homeowner’s insurance. This is an important payment that must be made on time every year. Some homeowners set up automatic drafts from their bank accounts just so the payment is made on time, every time.
California law requires any homeowner’s policy sold in this state to cover certain events and types of damage. Most people do not have the money to repair fire or flood damage and might be left homeless after a major event without this coverage. For example, the average cost of fire and smoke damage is about $9,900. Flood damage can cost $40,000 for only six inches of water in the downstairs of a two-story home. If the house is a total loss, it can cost hundreds of thousands of dollars to rebuild or find another home of similar size. After a major event, the family may not be able to live in the home for some time, resulting in the need for rental payment coverage as well as payment of other expenses.
California weather can be highly unpredictable. California is also home to several types of natural disasters such as wildfires, floods and earthquakes. California homeowners may also suffer individual disasters such as an unexpected house fire due to faulty wiring or a small, localized flood.
Finally, homeowners must have liability insurance to protect them from being sued. Anyone who is injured on their property could potentially file a lawsuit. Even something as simple as a slip-and-fall could result in tens of thousands of dollars being awarded to the victim. People today are simply more likely to file a lawsuit than in the past, and it is important to meet this reality with the right insurance coverage to protect yourself, your family and your home.
Gregg Stapp Insurance Services can help you determine the right homeowners insurance policy that to meet your coverage needs and fit your budget constraints. Gregg Stapp’s professional insurance agents will help you determine how much exposure you have as a homeowner and ensure that you have a policy that will protect you, no matter how damage is done to your home or how much you are sued for by an injured victim.
One of the biggest questions in deciding on an appropriate homeowner’s policy is the question of how much coverage is appropriate. Your coverage amount will not only affect how well-protected you are but the price of your policy as well. It is possible to buy too little insurance for your needs, but it is also possible to buy too much! Gregg Stapp and his team of professionals are ready to help you decide on the right level of coverage for your needs.
Here are some important factors that affect your coverage level and the price of our policy that you may wish to review with your Gregg Stapp Insurance agent.
Deductible. The deductible is the amount that you must pay out of your own pocket before your homeowner’s coverage pays any benefits. A common deductible is $500 per covered event, but you may want to set your deductible higher or lower. Some companies do not allow you to go below or above a certain amount or your deductible, and your home mortgage lender may have acceptable deductible limits as well. Your deductible is one of the factors that determines the cost of your policy: a higher deductible usually translates to a lower premium. However, a higher deductible also means that you must save up more money in case of a sudden claim due to a fire or a flood, so it is a good idea to open a savings account and keep the amount of your deductible handy just in case.
Extra coverage. Do you need special policies for your home such as glass breakage? If you live in a home with tons of windows and doors, this may be a concern, or if your windows would be very expensive to replace. There are also extra riders for your landscape elements, your pool and other special features of your home
Liability levels. How much liability coverage you need for your home is a question that many experts debate. One of the biggest factors in your decision on liability levels is the number and type of assets you have. If you have money or other assets to protect, it may be wise to consider an umbrella policy in addition to your regular home and car policies.
Contact Gregg Stapp Insurance Services today for your free home insurance audit. Gregg Stapp and his team will help you decide exactly how much coverage you need to protect your most valuable investmentyour home.