Owning your own home is extremely gratifying. However, the process of buying it is incredibly complicated. One of those stressful and difficult elements is purchasing homeowners insurance. However, having a homeowners insurance policy will give you peace of mind knowing that your investment is protected.
In the state of Indiana, Many homeowners insurance companies closely model their policies after the HO-3 policy. It provides financial protection against damage or destruction to the structure of your house, the contents of your home, and many other factors. Unfortunately, there’s certain disasters which homeowners insurance usually does not protect. You will have to ask your agent about these and how you can protect your home.
|Type of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$200,000|
|Replacement Cost (Contents)||$160,000|
Typical coverage limits for an HO-3 policy in Indiana are listed in the table above. Of course, the numbers in the table above are modeled after a modest $200,000 home. If your home is more expensive, requires extra protection for additional structures, or is located in an area where certain uncovered natural disasters may cause damage to your property, you might need to purchase higher coverage limits or ask your insurance agent about adding specific endorsements to your policy.
Obviously, cities with higher property values tend to have higher insurance rates overall. But keep in mind that these are estimates for average quotes across the region as a hole. In a city like Fort Wayne, for example, your required premium payment could be as low as $966 from from one company, or as high as $2,123 from another homeowners insurance company right down the street. That’s over $700 difference between companies for insuring property located in the same zip code. This is why it’s so important for homeowners to do their homework and shop around. If you do it right, you could end up saving tens of thousands of dollars in insurance premiums over the life of your mortgage.
There is no federal law mandating that homeowners buy insurance on their property. And in Indiana, there are no state laws requiring it either. However, the bank who is lending you the money to purchase your home will likely require you to purchase homeowners insurance also. This is because until you finish paying off your mortgage, the house still technically belongs to the bank. And they have a vested interest in protecting that investment from Financial ruin.
Taking a home inventory before you start shopping for insurance can be tedious and cumbersome. But if you want to protect yourself from wrongly estimating your coverage needs, you have to bite the bullet and do it. An accurate home inventory can help you get the most comprehensive coverage for the best possible rate. If you don’t take an inventory, you can only guess how much coverage you need in order to protect your home and property. If you guess wrong, you could end up with too little coverage which will give you a bigger financial burden if something bad happens, or you could buy too much coverage and end up wasting money and yearly premiums. Secondly, when you need to file a claim on damage to your structure or personal belongings, if you don’t have a home Inventory, your insurance company may not pay a sufficient amount of money to replace or repair what was damaged. And in the worst case scenario, they may not pay out on the claim at all.
The basic homeowners insurance policy that many Indiana insurance companies offer generally only covers common, basic disasters that aren’t too expensive to fix. On top of your basic policy, there are many other factors to consider. Such as:
If you file a claim and your insurance provider decides to pay it out, they will determine the amount you receive based on either its replacement cost or its actual cash value. If your insurance company honors the replacement cost of your claim, that means they will pay out the full amount required to replace or repair your property as if it were brand new. The actual cash value payout, however, will likely be smaller due to the fact that this type of classification takes depreciation into account. So the older your property is, the less money you are insurance company will pay out based on an actual cash value claim.
You may already know that your credit score is an important factor when purchasing insurance; but did you know that it’s the same for a homeowners policy? It’s true, unfortunately. Luckily, however, they only take your past 7 years of credit history into account as it relates to other forms of insurance. They do not perform a hard credit check, which could leave a blemish on your credit history that lowers your overall credit score.
They get a snapshot of your credit rating in what is called a “CLUE” report. This report includes the credit history we mentioned in the previous paragraph, but the credit rating agencies that evaluate your credit score will not be privy to this information. So you can shop around and get as many quotes as you want feeling secure in the knowledge that it will not adversely affect your credit score in the future.
For more information, feel free to click any of the links you see in this article. They all lead to more detailed information about homeowner’s insurance, specifics on purchasing a policy, and how to find the best deal. You should also contact local resources in your state, such as:
Or contact them directly through the following resources:
Indiana Department of Insurance
311 West Washington Street, Suite 300
Indianapolis, IN, 46204
Phone: (317) 232-2385