Homeowner’s Insurance & Mobile Home Insurance
Understanding Homeowner’s Insurance for Homes / Mobile Homes Tallahassee, Georgia and Alabama
A homeowners insurance policy usually covers four kinds of incidents on the insured property: interior damage, exterior damage, loss or damage of personal assets/belongings, and injury that occurs while on the property. When a claim is made on any of these incidents, the homeowner will be required to pay a deductible, which in effect is the out-of-pocket costs for the insured.
For example, say a claim is made to an insurer for interior water damage that has occurred in a home. The cost to bring the property back to livable conditions is estimated by a claims adjuster to be $10,000. If the claim is approved, the homeowner is informed of the amount of their deductible, say $4,000, according to the policy agreement entered into. The insurance company will issue a payment of the excess cost, in this case, $6,000. The higher the deductible on an insurance contract, the lower the monthly or annual premium on a homeowners insurance policy.
Every homeowners insurance policy has a liability limit, which determines the amount of coverage the insured has should an unfortunate incident occur. The standard limits are usually set at $100,000, but the policyholder can opt for a higher limit. In the event that a claim is made, the liability limit stipulates the percentage of the coverage amount that would go toward replacing or repairing damage to the property structures, personal belongings, and costs to live somewhere else while the property is worked on.
Acts of war or acts of God such as earthquakes or floods are typically excluded from standard homeowners insurance policies. A homeowner who lives in an area prone to these natural disasters may need to get special coverage to insure their property from floods or earthquakes. However, most basic homeowners insurance policies cover events like hurricanes and tornadoes.
Low Cost Homeowners Insurance and Mortgages
When applying for a mortgage, the homeowner usually is required to provide proof of insurance on the property before the financial institution will loan any funds. The property insurance can be acquired separately or by the lending bank. Homeowners who prefer to get their own low cost home insurance policy can compare multiple offers and pick the plan that works best for their needs. If the homeowner does not have their property covered from loss or damages, the bank may obtain one for them at an extra cost.
Payments made toward a homeowners insurance policy are usually included in the monthly payments of the homeowner’s mortgage. The lending bank that receives the payment allocates the portion for insurance coverage to an escrow account. Once the insurance bill comes due, the amount owed is settled from this escrow account.
Home Insurance vs. Home Warranty Tallahassee, Georgia & Alabama
While the terms sound similar, homeowners insurance is different from a home warranty. A home warranty is a contract taken out that provides for repairs or replacements of home systems and appliances such as ovens, water heaters, washers/dryers, and pools. These contracts usually expire after a certain time period, usually 12 months, and are not mandatory for a homeowner to buy in order to qualify for a mortgage. A home warranty covers issues and problems that result from poor maintenance or inevitable wear-and-tear on items—situations in which homeowner’s insurance doesn’t apply.
Homeowner’s Insurance vs. Mortgage Insurance
A homeowners insurance policy also differs from mortgage insurance. Mortgage insurance is typically required by the bank or mortgage company for homebuyers making a down payment of less than 20% of the cost of the property. The Federal Home Administration also requires it of those taking out an FHA loan.1 It’s an extra fee that can be figured into the regular mortgage payments, or be a lump sum charged when the mortgage is issued.
Contact Southern Allied Insurance on details for your Homeowners Insurance in your area.