Most insurance topics are confusing to the average consumer. On some level, we know that having insurance to protect against certain risks is a good idea, but unanswered questions can sometimes result in making the wrong purchase. Here are some common questions and answers about California homeowners insurance.
Why Should I Buy California Homeowners Insurance?
Unless you hold the deed to your home, you likely don’t have a choice. The fact is that any mortgage company is going to require that you have homeowners insurance so that their investment in your property is protected from loss. Some condo associations also require homeowners to have home insurance. Aside from this, a homeowner’s insurance policy is just a good idea because it will protect both your house and personal property, as well as give you liability coverage for injury to other people or their property.
Does the Location of My Home Make a Difference?
If you are buying California homeowners insurance, the location of your home matters for several reasons. Certain perils, such as mudslides and earthquakes, are more prevalent in various parts of the state. If you live in one of these areas, you’ll want to insure your home accordingly with flood and earthquake insurance. Also, location is a primary factor in how your home insurance is priced.
What Sorts of Things Affect My Insurance Premium?
Aside from zip code, several other factors are used to rate, or price, homeowner’s insurance premiums. This includes the age of the home, the type of construction (frame construction is priced higher), and your proximity to local emergency services. Your insurance premium will also go up or down based on the insurance policy limits and the deductible that you choose.
Select the same insurance company for all of your policies to receive premium discounts.
Is My Personal Property Covered?
Your personal property, which is the contents of your home and other personal belongings that you own, is covered by your homeowner’s insurance policy. The coverage limits are generally 50 percent of the value assigned to your home, yet higher value items should be disclosed and separately listed.
What is Replacement Cost vs. Actual Cash Value?
A homeowner’s insurance policy can be purchased on a replacement cost or actual cash value (ACV) basis. A replacement cost policy will pay the amount to repair or replace your lost or damaged possessions, without allowance for depreciation. An ACV policy factors in depreciation, so the amount you receive after a loss may not always be enough to replace personal property. This is important since one study found that nearly two-thirds of homes in the U.S. are underinsured. While ACV language is most common, replacement cost coverage is available and may only cost as much as 10% more each year in homeowner’s insurance premiums.
What Types of California Homeowners Insurance Discounts Are Available?
While buying homeowners insurance is a common cost associated with home ownership, it’s nice to save a few dollars on a policy. There are some policy discounts available for qualified applicants. If your home has a modern security system, you could save as much as 2% on your premiums. Other safety features such as sprinkler systems, smoke detectors, and dead bolts might also receive discounts. Another way to receive discounts is by buying your auto and home insurance from the same company.
Homeowners insurance is an important coverage that provides several protections for your family and its property. Avoid the possibility of catastrophic losses and get a homeowners insurance quote now.
The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.
