Learn what types of insurance are available, what’s covered, and how to lower your premium

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Homeowners’ insurance is designed to protect you against financial loss. Your policy covers both the physical structure of your home and your possessions. It also provides liability coverage for property damage or personal injury caused by you, your family members, or your pets. The extent of coverage will be affected by your deductible amount and the maximum limits on your policy.

Because you must have homeowners’ insurance to finance a home, it’s critical to know all you can about it. Consider these six facts before buying (or renewing) your homeowners’ insurance policy:

  1. No two policies are alike. Most standard homeowners’ insurance policies protect you against fire, theft, and other disasters; however, each policy is designed to cover only the belongings specifically listed in your policy. And some policies provide more protection for certain personal belongings or your home’s structure, so clearly define what you need in your policy.
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  1. Different types of coverage available. Most policies offer three types of coverage. Cash value coverage is the least expensive and covers up to your policy’s limits (less depreciation). For a little more coverage at a slightly higher price, you can choose replacement cost coverage, which fully reimburses your losses up to your policy limit and doesn’t deduct for depreciation. And lastly, extended (or guaranteed) replacement cost coverage allows you to replace your home as it existed before the disaster occurred, even if the damage exceeds your policy limits — it is the most expensive of the three options.
  2. Not all disasters are covered. While most standard insurance policies provide excellent protection, they don’t cover every disaster that occurs. For example, if you live in an area prone to certain disasters, such as flooding or earthquakes, you must purchase a separate insurance policy to protect your home. Additionally, not all policies cover damage due to a sewer backup or mold, so be sure to double-check your policy.
  3. Home maintenance may help your claim. Some homeowners’ insurance policies contain a statement that reads, “damage must be sudden and accidental.” That means if the damage is intentional or occurs over a more extended time, your policy may not pay a claim you make. The best way to ensure that your claim is approved and paid is to perform regular maintenance on your home, including an annual plumbing check-up and roof inspection. Then take quick action to repair any issue you find. That way, you’ll have verifiable evidence that you’ve taken steps to keep your home safe.
  4. Claims have deadlines. It’s vital to file an insurance claim as quickly as possible after a disaster occurs. Many policies have a claim window that may be as short as 14 days. And if you fail to file your claim within your policy’s specified time, it may be denied.
  5. Home improvements can make a difference. Certain upgrades or enhancements that improve the safety and security of your home may help lower your premium. Maybe you install new smoke detectors or an alarm system. Or you upgrade your windows and doors, including adding new deadbolt locks. To ensure that you get the best deal possible, meet with your agent annually to review your coverage and discuss any home improvements you’ve made.
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Choosing the best homeowners’ insurance

Before you purchase homeowners’ insurance, be sure to compare rates so you can find the best policy for your circumstances. Once you decide on one, review it with your agent to make sure you understand everything included in the policy before you buy it. That way, there are no surprises when you need to use your insurance.

Paying for homeowners’ insurance is easy with an escrow account

If you have a Wells Fargo mortgage, we can use your escrow account to make your homeowners’ insurance premium payments. Just let us know if you make any changes to your insurance, so we can adjust your account (if necessary). Those without an escrow account should make their premium payments directly to their insurance company.

If you’d like to open an escrow account for your Wells Fargo mortgage, it’s easy to do. Contact a home mortgage consultant to get started.