FTHer Series - 2. The Game of Life - Homeowner’s Insurance

In the game of Life, you have the option to purchase insurances for yourself such as life, car and health insurance. As an FTHer you’ll be introduced to the wonderful world of owning a home and the fees that come along when purchasing your first home, including homeowners insurance.

Homeowners insurance - sometimes called fire insurance - serves as protection for your home in case of a disaster such as a fire. This required insurance, gives you and your lender piece of mind if something happens to your home. Why the lender? They need to cover their butt since it’s
it’s their money in your house. This insurance is an annual policy that you must renew every year. Let’s take a look of what it covers:

* Dwelling Coverage - How much it would cost to replace your home in case of water, fire or smoke damage including the garage. This amount is typically based on your home’s square footage.

* Appurtenant (other) Structures - Protection on anything detached from home such as a pool or fence up to 10% (minimum) of dwelling coverage.

* Household & Personal Property - All personal property in your home.

* Additional Living Expenses - Such as, loss use of your home due to an emergency evacuation such as a fire. You might have to pay to rent a home and they’ll reimburse you.

* Personal Liability - To protect if someone sues you. World wide liability in the event a claim is made or a suit is brought against any insured for damages because of bodily injury or property damage caused by occurrence to which this coverage applies. They will pay the limit of liability for the damages for which the insured is legally liable and provide a defense at your company’s expense. (Sorry legal jargon)

* Medical Payments - Covers anybody that’s visiting your home who might get injured up to minimum of $1,000.

* Deductible Amount - Any loss, like a fire, theft other than liability up to your deductible limit (options available).

When shopping for a homeowners insurance it’s important to look for a good price, coverage and service. There are many insurance companies out there willing to bid for your business which helps you find the right company. When getting quotes variable discounts apply with different companies, such as new home credit, new loan credit, age of the buyer and package discounts.
It’s recommended to get a policy for at least 100% of its estimated replacement cost excluding land value. Please know that flood and earthquake are excluded and are separate policies.

Here’s a hypothetical quote for a home at $300,000 with 1200 square feet, no pool or fire place built in 1990:

Dwelling Coverage                 $180,000.00
Other Structures                   $ 18,000.00
Household & Personal Property $126,000.00
Additional Living Expenses       $ 36,000.00
Personal Liability                    $300,000.00
Medical Payments                  $  1,000.00

Annual premium would be         $    506.00 (Fee you pay each year)

Age and zip code along with square footage helps determine the dwelling coverage not the market value or loan amount. Please remember this is a hypothetical quote! Having a pool, more square footage, a fire place, etcetera makes a difference in your quote. Have more questions? Feel free to contact me and we can discuss it further!

I would like to thank Karen Smith with California Insurance Specialists.