Maybe it all started when you saw your neighbor’s house for sale on Facebook. Maybe you have been perusing Zillow for a while now. Your partner is liking the idea of an additional tax deduction. You think about it…and soon, you have fallen in love with the idea of owning a place of your own! Eventually, you find the perfect home, and you are so excited! However, you are still wondering whether you really could buy a house of your own. You are asking yourself a lot of questions. What about interest rates? How much money do I need for a down payment? How much will my payments be?
And, WHAT ABOUT HOMEOWNERS’ INSURANCE?
Chances are, if you never owned a home, you have given little or no thought to homeowners’ insurance. How do we buy it? Are there different kinds? What are normal Texas home insurance rates looking like? You have a lot of questions.
We can help you with that. Think of your VOS Insurance agent as your personal insurance consultant that is here to answer every question you have about how to properly insure your home. Let us show you a few important points to ponder as you think about insurance. Along the way, we want to show you some details about the kinds of risks covered in policies and how to understand them.
First, let’s cover some of the basics.
Why Should I Have Homeowners’ Insurance?
Homeowners’ insurance serves two basic purposes. First, it covers costs to the property owner in case of loss or damage to the home. This includes loss of personal property. Second, it protects the homeowner from liability in case of death or injury of another person.
Let’s look at some examples of insurance coverage and how it is used.
Last year, Hurricane Harvey created unprecedented devastation due to flooding over the east coastal region of Texas. According to The Washington Post, Harvey delivered over 9 trillion gallons of water throughout Houston and the surrounding area during this disaster. According to USA TODAY, only about 20% of those homeowners had flood insurance. This insurance coverage enables individuals to file claims to restore their homes without suffering undue financial hardship in the case of flooding.
Trees are a common cause of property damage. If your black maple tree topples over on your house one day, your homeowners’ insurance will cover the costs of repairs that you would pay out of pocket. This kind of protection is important security for you and your family. It is a buffer against seizure of your other financial assets, as it provides substantial payment in case you are found liable.
However, depending on how the home is used the insurance might be slightly different.
The Kinds of Real Estate Property Insurance
There are several types of homeowners’ insurance. First, there are your typical owner occupied insurance policies. These cover the structure of the home you live in, the other structures on the property, and your personal property inside the home. Your homeowners’ insurance also provides liability protection, which is spelled out in the policy. Each policy is individualized based on the value of your home, the amount of personal property, the chosen deductibles, coverage limits, and several other factors.
Below are 3 of the most frequently selected homeowners’ insurance policies. Ask your Vos agent which is right for you.
Dwelling Insurance– (Texas Dwelling Policy- TDP)
TDP Forms and How They are Used
The TDP-1 is a basic form. It covers the building and personal property against specified perils.
The TDP-2 is a broad form. Like the homeowners’ broad form, it covers the building and personal property against a list of specified perils. It covers a larger list of perils than the TDP-1 basic form.
The TDP-3 special form, like the homeowner’s HO-3 form, offers open-perils coverage on the building. It also covers personal property against a list of specified perils.
Owners of non-owner occupied properties (landlords) obtain a different type of homeowners’ insurance policy. The landlord carries insurance for the structure, the landlord’s personal property and for liability claims that could arise. The landlord’s policy will not insure a tenant’s personal property. If the tenant wants coverage for their personal property, they must obtain a renters’ policy. (Renters’ policy discussed below). Dwelling policies can be owner occupied but probably not the best option for a homeowner.
Condo owners purchase a specific type of homeowner policy, called the HO-6 policy. This covers damage/loss of the owner’s personal property and the interior of the condon from the studs inward. This policy also provides homeowner protection against liability claims and additional living expenses if forced to live elsewhere due to a claim. The structures of condo buildings are insured through a commercial property policy purchased by the Homeowners Association managing the property. Condo Insurance can be confusing for homeowners’. Make sure to speak to a Vos agent to guide you through the intricacies of insuring your condo correctly.
Renters’ Insurance, also known as HO-4, is different from typical homeowners’ insurance in several ways. Renters’ insurance provide personal property and liability coverage for the renter. It does not cover the building structure itself. This is covered by the insurance policy which the landlord maintains..
|Owner Relationship||Type of Policy|
|Owner-occupant||Homeowners’ Insurance Policy|
|Owner- occupant or non-occupant||Dwelling Insurance Policy|
|Condo Owner-occupant||Condo Insurance Policy (wall, floors, ceiling, from studs inward)|
|Renter/tenant||Renters Insurance Policy|
Which begs the question: How much insurance should I buy?
There are many factors to consider when insuring your home. As insurance professionals, VOS Insurance agents will ensure that your bases are covered. It is important to speak with someone who knows all of the details and can ensure that no details are missed. We want to ensure that your policy covers what you need in case of a claim. But for now, here are the basic things to know.
There are various types of policies. Each type of policy is designed to fit a specific set of requirements for the needs of the policyholder. In addition, there are other factors to weigh, such as deductible amounts and how they will affect the cost of the policy. You will want to ensure that the policy will be sufficient in the case of needing to file a claim. You may want a replacement cost value or an actual cash value policy. You may want to ensure that certain additional kinds of damage are covered, such as flood insurance. All of these factors influence premiums.
As you can see, it can be quite dizzying at times to sort through all of the options, and to decide which to choose. We can help. If you have any questions, call us.
Your VOS Insurance Agents.