Frequently Asked Questions about Homeowners Insurance

Owning your own home is part of the American dream. Protecting it against any unforeseen accidents or natural disasters is one of the realities of home ownership. Before purchasing homeowners insurance in Santa Maria, CA, or your hometown, it is important to learn the facts about homeowners insurance in order to choose the right type of coverage for your home. Read on to get the answers to some of the most frequently asked questions about homeowners insurance.

What Is Homeowners Insurance?

Homeowners insurance, also called hazard insurance, is a type of insurance policy that protects the home and its contents against potential hazards, damage, or emergencies. This type of insurance typically covers the cost of restoring damage caused natural disasters, water, or fire and loss of personal property due to theft or vandalism.

Am I Required to Purchase a Homeowners Insurance Policy?

Unlike auto insurance, homeowners are not legally required to purchase a homeowners insurance policy. However, most mortgage lenders require homeowners to purchase a minimum amount of insurance coverage before issuing a loan. If you own your home free and clear, you are not required to carry homeowners insurance.

What Are the Different Types of Homeowners Insurance?

Because each home is unique, there are several different types of homeowners insurance policies designed to meet the specific needs of your home. The following are some of the most common types of homeowners insurance policies:

Straight replacement coverage: This policy provides a pre-determined amount of money to repair or rebuild your home.
Guaranteed replacement cost coverage: This policy provides the necessary funds to fully replace your home regardless of increased building costs, inflation, or policy limits.
Flood Insurance: This policy provides necessary funds to repair or replace your home if damaged by floodwaters. Standard homeowners insurance policies to not cover water damage caused by waterways or dams.
Earthquake Insurance: This policy provides necessary funds to repair or replace your home if damaged or destroyed by an earthquake. Standard homeowners insurance policies do not cover damage caused by earthquakes.
Mortgage life insurance: This policy provides necessary funds to pay off the mortgage loan on the home in the event of the homeowner’s death.

How Much Coverage Do I Need?

Because your home is your largest and most important asset, it is important to purchase adequate insurance coverage to fully protect it against any type of loss. Most insurance providers recommend purchasing a policy worth at least 80% of the replacement value of your home and personal property inside the home. Purchasing additional coverage is highly recommended to ensure that your home is properly protected.

What Factors Affect Homeowners Insurance Premiums?

A premium is the yearly cost of your insurance policy. The following factors can affect the cost of your homeowners insurance premium:

Features: Your home’s age and characteristics including type of structure, roof, and wiring, can all affect the cost of the premium.
Location: Insurance rates can be affected by certain neighborhoods or locations predisposed to extreme weather conditions.
Protective devices: Smoke detectors, alarm systems, fire extinguishers, sprinkler systems, and deadbolts can lower insurance premiums.
Personal factors: Nonsmokers and individuals with a good credit history may be eligible for lower insurance premiums.
Claims history: Individuals with a history of homeowners insurance policy claims may pay a higher premium.

What Items Are Excluded from Homeowners Insurance Policies?

When shopping for homeowners insurance in Santa Maria, CA, it is important to understand that most comprehensive policies have certain limitations and exclusions. Some of the most common items excluded in homeowners insurance policies include automobiles, motorhomes, boats, business property, and pets. Some policies may also provide limited coverage on guns, jewelry, and silverware. Consulting an experienced insurance agent can be helpful to ensure that you find the right policy for your coverage needs.