Homeowners insurance is something that many consumers rely on to protect their assets in the event of a natural disaster, burglary, or fire. But, it’s an additional monthly expense that might lead some homeowners to wonder whether they really need home insurance, or if they can just hope for the best. Here is what you need to know if you’re on the fence about buying a homeowners insurance policy.
Homeowners insurance statistics
In states that experience heavy storm activity, homeowners generally pay around 2% of their income in insurance premiums. Although for some that is a significant expense, most Americans choose to pay it rather than go without insurance—95% of homes in the U.S. are insured. About 5% of insured homes will have a claim this year, and wind or hail damage will be the most likely cause.
What it means to be self-insured
Most mortgage lenders require you to purchase home insurance as a requirement to securing the loan, but if you’ve paid for your home in full, then self-insurance becomes an option. Homeowners who opt for self-insurance regularly set money aside to pay for any damages to their homes rather than purchasing an insurance policy. Home repairs are sometimes very expensive, and those who are self-insured often find they cannot afford to pay for the cost of materials and labor with only their liquid assets when their home is damaged. The biggest disadvantage of self-insurance is that you have access to only the amount of money you have set aside, rather than the coverage of a comprehensive HO3 homeowners insurance policy.
Managing home insurance costs
There are several ways to reduce your insurance premiums to avoid dropping your homeowners insurance altogether. One way to do this is to raise your deductible if you can afford to do so. If you have a typical deductible of around $500, and can afford to double it to $1,000, you can save as much as 25% on your premium, depending on your policy. Ensuring that your home is as secure as possible will also reduce your insurance costs. Measures like installing burglar alarms and smoke detectors can save you up to 5% on premiums. Replacing old fixtures or roofs may also improve your rates. Keeping your home up to date will ensure that you get the best possible value from your insurance policy. Even small improvements may reduce home energy costs or increase the value of your home. Visit the Insurance Information Institute to learn about other ways you can save.
When it comes to homeowner insurance, the peace of mind that comes with professional service and timely responses to claims should be foremost in your mind as you shop around for a policy you can afford and that suits your needs. Your agent can help you determine the right policy at the right price for you. Learn about our HO3 homeowners insurance policy at heritagepci.com.