• The 4 Steps of the Foreclosure Process
• What are HUD Homes? The Basics
• What Are Bank Owned Homes?
• Mortgagee Letters from the FHA
• How to Buy in a Foreclosure Auction
• Why Mortgage Qualification is Key for Buying Foreclosures
• Homes for Sale - The Details behind Government Foreclosures
• How You Can Benefit from Tax Foreclosure Properties
• Pre-foreclosures: What Goes On Before the Auction Sale
• How to Buy a HUD Foreclosed Home

Home Owner Insurance Guide

There are a lot of insurance companies out there, and a lot of different kinds of home owners’ insurance policies. Your particular situation probably involves just as many variables as there are choices for home owner insurance companies and policies.  Where to start?  What elements can influence your decision on this, or the costs of your premium for your homeowners’ insurance policy?

Location

You won’t have a whole lot of control over this one.  Some states have higher home insurance rates than others, due to regulations, structure and a lot of other variables (Texas currently tops the list).  Also, if you’re closer to a coastline or in a flood-or-earthquake-prone area, expect to pay more (or you may not even be able to find homeowners’ insurance coverage at all.  Flood, hurricane or earthquake policies may have to be a separate endorsement on top of your policy.

Covered Property  

Covered property will fall into four categories, all of which can have an effect on your home insurance rates.  Here’s a brief glossary of what you might see in the fine print of your home owners‘ insurance policy:

1. “Dwelling” refers to the house itself.
2. “Other structures” means a detached garage, tool shed, barn, etc.
3. “Personal property” is everything inside the house; clothes, furniture, appliances, electronics, etc.  Some items may not be covered, such as cash, jewelry or firearms.
4. “Loss of use” is a clause that will cover a stay in a motel or rent house if disaster strikes and your home is uninhabitable.
5. “Open perils” vs. “Specific Perils” - This bit of legalese refers to the particular things that are covered in the homeowners’ insurance policy (“open perils” or “named perils”), vs. the unnamed eventualities that may require an extra clause or extra fee tacked onto your premium.  It can get tricky; for instance, you may be covered for earthquake damage, but may not be covered for water damage if your sprinklers go off during the earthquake.  When shopping for a home owners’ insurance policy, consider what extra “specific perils” might present themselves.  

Insurance-To-Value Ratio

Most home owners insurance policies will require at least 80% coverage of the actual replacement cost of your home and belongings.  This can get tricky, though. A $100k house may only be covered for $50k of belongings inside it.  Extra coverage may involve a special endorsement or rider on your policy.  Also bear in mind that a wide-scale disaster like wildfire, hurricane or flood may cause a spike in material and labor costs for rebuilding -- make sure your homeowners’ insurance policy has enough coverage.

Liability

If you're a first time home buyer there are certain unplanned accidents that may occur that you should be prepared for. Any number of things could happen on your property -- a dog bite, an injury, an accident -- and you could be sued for them.  Talk to your individual agent to make sure that you’re covered on your homeowners’ insurance, in the event of anything happening that could bring a lawsuit.