Basic Homeowners Insurance

It’s understood that most us are out to get the best possible deal on our homeowners insurance.

That’s why lots of folks set out to know the details on a basic homeowners insurance policy, so they can get a “barebones” price and have something to compare against.

Also, for most people, it’s a waste of money to pay for more insurance than you actually need.

The desire seems simple enough but with so many unscrupulous insurance salesmen and companies committing fraud today, it’s real stressful to filter the good deals from honest companies with the insurance co’s that just want to rip you off!

Situations Where You Need At Least Basic Homeowners Insurance

Let’s first make sure we’re on the same page about when insurance is necessary:

If you plan to finance your home you’ll absolutely need to have it.

Why? Because the lender is investing their money in your home. (Makes sense that they need to protect their investment!)

Now, for folks who paid off their home (or purchased in cash!) – a homeowner’s insurance policy might not be required but I *strongly* recommend having a least a basic insurance policy.

A basic homeowners insurance policy will cover you from theft, fire, property damage and (depending on the policy) natural disasters like earthquakes and floods.

Important: Never just assume you’re covered even for these simple things. Policies can be tricky and deceptive… make sure not only to talk with your insurance agent but also make sure you review your policy personally!

Example Of How Insurance Kicks In When You Have A Tragic Event

A friend of mind recently had a freak electrical fire in his home.

A power strip shorted out for no reason and caused an electrical fire in the basement.

The fire consumed their entire 2-story home and all of the family’s possessions were destroyed.

First off, they needed a place to stay...

Compensation for housing. Their homeowner’s policy arranged for a temporary living space for the family while their house was being rebuilt.

Liability coverage. Because the fire was a freak occurrence, the family did not have to pay 1 cent and had their entire house rebuilt, furniture and personal property (clothes, electronics, etc.) completely replaced with brand new items.

A basic homeowners insurance policy will usually cover these 2 aspects but the actual amount that you’re covered for can vary greatly.

Also floods and earthquakes are typically not covered in a basic policy. (You need extra insurance for those!)

Considering Basic Homeowners Insurance

The best thing you can do to figure out how much insurance you need is to take a complete inventory of all your personal stuff.

Write everything down and attach a general value to them. (No need to go crazy getting specific prices… just guess how much they’re worth right now.)

This might take longer for some than others but it can literally save you thousands and thousands of dollars in the long run!

Now... look at your list and ask yourself, if disaster struck and you lost everything, would your insurance policy cover it all? If not it’s definitely time to revisit your insurance needs.

Smart Homeowners Insurance Search