Homeowner’s insurance is a form of property insurance that provides financial protection and liability coverage against damages to a home. It covers interior and exterior damages, loss or damages to personal assets, and even injuries that may arise while on the property. The coverage, however, has a standard liability limit which can be raised higher depending on the homeowner.
But what if you’ve already paid off your mortgage and you have a home warranty – do you still need a home insurance?
You may have wondered about the value of home insurance, especially if you’re thinking of buying a new home. In fact, maintaining your home insurance coverage is not a requirement anymore since you’ve paid off your mortgage. But don’t drop your home insurance just yet. Here’s how home insurance works and why you still need it.
What does homeowner’s insurance cover?
Homeowner’s insurance standard policy generally provides financial protection in the following coverage areas your insured home:
- Damages inside and outside of your home, including attached structures
- Loss or damages of personal assets / belongings due to cases specified in your policy
- General liability related to a person’s injury while on the property
- Other additional costs to cover loss (e.g. cost incurred from living elsewhere if the home is uninhabitable)
Specifically, some of the key items covered by most policies include:
- foundation, walls, roof and other structural elements
- outdoor structures on your property (Barns, tool sheds, fences)
- appliances, electronics, furnishings and possessions
- reimbursement for medical bills and legal expenses incurred due to an injury or accident on your property
- additional costs like living expenses and meals if you’re unable to live in your home
What items aren’t covered by most homeowner’s insurance policies?
Most homeowner’s insurance policies cover repairs, restoration and replacement costs of the damaged items due to fires, storms, hurricanes, tornadoes, smoke or vandalism. Acts of war or acts of God (e.g. earthquakes, flood) are typically excluded in the policy. So if you live in an area that is prone to these natural disasters, you may need to get a special coverage to protect your home.
Some items not covered by most policies include:
- Damage due to regular wear and tear
- Damage due to rot, rust or mold
- Food spoilage due to power failures
- Earthquake, Flood, and Sinkhole damage
- Termite destruction or Rodent damage
Many policies have limits in their coverage. So, it’s always wise to read your policy thoroughly and carefully in order to know what is and what isn’t covered. Speak to your insurance agent about your insurance coverage and options if you need additional items covered.
How much is the cost of homeowners insurance?
The average cost of homeowners insurance in the US is $1,630 and varies per state. In Houston, the average premium is $1697 varies depending on different factors like:
- Your Houston insurance provider
- Location of your Houston home (rates by ZIP code)
- Condition and construction of your roof
- Home upgrades and renovations
- Presence of pets and animals in your property
- Special features (e.g. swimming pool, trampoline)
- Home value of your home
- Construction year and type of home
- Previous homeowner’s claims
- Deductibles
- Coverage limits
These are just some of the factors that can affect the cost of your homeowner insurance. These can either lower or increase your home insurance cost, and to some extent even cause you to be denied coverage.
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First, you need homeowner’s insurance to get a mortgage until your loan is paid off. This is one of the requirements before the financial institution will loan you. When you’ve already paid off the mortgage, maintaining the home insurance is up to you – the homeowner. However, it’s wise to maintain homeowners insurance for financial protection in the event that your house is damaged. Unless you have the money to replace all damaged items or buy a new house, then it’s your choice to take the risk of losing your biggest investment.
Do you need homeowner’s insurance if you have a home warranty?
A home warranty is another wise purchase. It’s a type of policy that a homeowner pays to cover the cost of repairing or replacing home systems and appliances if they break down. However, its scope is limited as it won’t include the physical structure of your home or your personal belongings; and it typically lasts for a certain period of time.
Staging of your home should not be taken lightly as it is one of the most important aspects in the home selling process.
Homeowner’s insurance policies aren’t always easy to understand. The best thing every homebuyer or homeowner can do is to talk to a realtor or an insurance agent before they begin shopping for a policy. They can help you understand and find the right homeowners insurance policy that fits your needs so you and your investment is protected and better prepared for any natural disasters or crisis.
Need help to get you started in buying a Houston home? If you have questions about homeowner’s insurance rates in Houston, don’t hesitate to reach out to us! We’re happy to be your Houston Real Estate companion.
About ApexPro Real Estate
ApexPro Real Estate Group is a full-service real estate brokerage specializing in single family and attached residential properties throughout Houston and the surrounding areas. We are a privately-held small business that brings together top agents, cutting-edge technology, and unparalleled service to help clients throughout Houston to buy and sell real estate — and enjoy themselves every step along the way. Our client reviews are exhibits our dedication to help our clients extends beyond the closing table and we would love to earn your business.