If you just purchased your dream home or you’re in the process of putting together the plan to buy it, there are a lot of angles and technicalities to consider.
One of the most important things to consider before buying a house is home insurance.
Don’t panic about how difficult the process of shopping, comparing, and buying an insurance policy is, all you need to do is hire a home insurance broker and you will be all set.
Here is your guide for home insurance as well as home insurance brokers.
What is Home Insurance?
Insurance in itself is similar to having a safety net underneath you just in case you fall, even if you are certain you will not. Home insurance is one of those safety nets you need to get to keep your house protected from any kind of damage due to reasons beyond your control.
At the same time, home insurance is more than just a safety net, it’s a necessity for any homeowner who wants to get mortgage approval.
It’s also a necessity even if you’ve fully purchased your house in cases of heft or a natural disaster that damages your home and could dig a hole in your bank account without proper coverage.
What Does a Home Insurance Policy Provide?
If you’re wondering what home insurance can give you in return for that monthly or yearly payment, the answer is longer than you think.
Home insurance can provide you with financial support in cases of damages due to vandalism, natural causes like hurricanes and lightning, and any other disasters. The compensation would cover all costs to fix or even rebuild your home. Even the contents of your home are covered in cases of flooding, for example.
Liability coverage in home insurance covers expenses when faced with lawsuits filed by others for damages or injury that occurred on your property.
A homeowner policy would also provide you with alternate residence if your house is being fixed or rebuilt, also known as additional living expenses, which even cover restaurant meals and other expenses due to having your home damaged somehow.
This sums up the types of home insurance coverages into three; actual cash value, replacement cost, and guaranteed replacement cost/value.
Why Is Home Insurance Important?
- Financial Protection
The most important thing that comes from insurance is money you won’t be able to pay when your home is damaged or stolen. Repairs or rebuilding a home is very expensive but with insurance, you won’t have to worry about a thing.
- Getting a Mortgage
Almost all mortgage companies have it as a requirement to have home insurance before you get approved for a loan because the house is the mortgage lender’s security on the loan.
That’s why it would make sense for the lender to protect their financial interest by requiring the property to be insured from damage.
- Home Emergencies
There are always unexpected emergencies that can occur around the house which can be covered by insurance such as a burst pipe, damaged roof, etc.
- Natural Disaster Coverage
Getting a comprehensive home insurance policy will have you protected from losses and damages caused by natural calamities such as floods, earthquakes, storms, typhoons, etc.
Additionally, it can cover things occurring from malicious intent like damages from vandalism, theft, strikes, riots, etc.
- Personal Belongings Protection
Your home insurance policy also protects items inside your house such as electronic appliances, furniture, electric items, etc, which can be lost due to theft or a natural disaster.
What Is a Home Insurance Broker?
Now that you know all about home insurance, you should also get to know the means to make sure you get the best home insurance policy out there.
A home insurance broker can either be an individual or a company and their role is to be an intermediary between yourself and a home insurer.
Their insurance knowledge and experience guarantee to find you the best policy that meets your needs and at the best price.
Home Insurance Broker vs. Independent Insurance Agent
Many people confuse the concept of a home insurance broker and an independent insurance agent, but they are quite different.
The main difference between a home insurance broker and an independent insurance agent is that a broker represents the customer while the insurance agent represents the insurance company.
This means that a home insurance broker works in your best interest as a consumer by giving you all insurance policy options without bias.
On the other hand, an independent agent can represent one or more insurance companies and work in their best interest instead of yours.
Who Needs a Home Insurance Broker?
Every homeowner looking to get their house insured will need to hire a home insurance broker, however, there are specific cases who will be even more inclined to do so.
Homeowners whose houses have specific issues, like being in a hurricane or tornado territory will find it more difficult to find an insurance company since most don’t easily write policies for such homes.
A home insurance broker knows each company’s policy and can save you time and money spent applying to the wrong companies.
Advantages of Hiring a Home Insurance Broker
- Easier & More Versatile Policy Shopping
When you hire an insurance broker, you get the huge perk of having a variety of policy options already laid out for you instead of going through the process of researching for companies yourself.
- Saving Money
One of the best perks of hiring a home insurance broker is that they will make sure you are getting the most reasonable price by comparing the cost of home insurance policies.
There’s also the fact that insurance companies offer brokers a lower cost for policies as an incentive for them to guide clients to buy their quotes.
At the same time, the impartiality of an insurance broker will not result in pushing you towards a certain company for their own interest but will find the policy most suitable to your needs.
- Choosing the Right Home Insurance Coverage
An insurance broker’s expertise comes in handy when they assess your home and what needs to be insured as well as your financial situation to make sure you are getting the right policy.
Many people struggle with choosing the best home insurance policy with all the complications it involves, but an insurance broker knows the ins and outs of insurance companies and can ease the process for you with all its technicalities.
How Are Home Insurance Brokers Paid?
When it comes to how to pay home insurance brokers, some brokers may charge a broker fee for their services while others don’t and instead get their money from commissions based on sales.
Their commission is usually determined by calculating a percentage of the premium cost.
Brokers can even get an additional commission if you renew your policy which encourages them, even more, to ensure you’re satisfied with your plan.