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Living in Louisiana can get expensive at times. When it comes to homeowners insurance, this is certainly no exception. As a matter of fact, Louisiana has the third-highest premiums, on average, for homeowners insurance. But you shouldn’t let this discourage you from buying your first home. Let us help you make the home insurance buying process as painless as possible with our handy guide.
Most homeowners insurance policies, especially the HO-3 policies, are very comprehensive. They cover not just the cost of repairing damages caused to your external structure, but they also pay for repairs or replacement costs of personal property. They can also protect you from Financial liability if something happens on your property, as well as medical expenses for anyone who gets hurt. Below are suggested coverage limits for a $200,000 home in Louisiana. Currently, average home prices in Louisiana are just under $200,000.
|Types of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$200,000|
|Replacement Cost (Contents)||$100,000|
|Deductible||$500 (2% deductible for hurricane claims)|
Naturally, this table only outlines average amount of coverage recommended for a $200,000 home. If your home cost less than that, then you won’t need to purchase nearly as much coverage. Most homeowners insurance companies will pay for repairing or replacing your structure regardless of what damage is it (with only a few exceptions). For personal property, on the other hand, you may need to purchase additional types of coverage in order to make sure you are completely protected.
Unfortunately for Louisiana homeowners, average premiums can vary wildly from one city to the next. This is because the higher populated cities, such as New Orleans, have higher property values and are located in Hurricane prone areas. More rural areas of the northern part of the state, on the other hand, tend to have lower property values, a lower population density, and are less vulnerable to severe weather. Shopping around, however, can help you find an affordable premium. Not all companies offer the same prices for their homeowners insurance policies. That’s why you should get quotes from a few different providers before you settle on a policy.
If you own your home outright, as opposed to having a mortgage, then you aren’t legally required to purchase homeowners insurance. However, this is still a really good idea. Especially in the state of Louisiana. Failing to protect your home financially, even if you own it completely, could prove disastrous if anything unfortunate happens to or on your property.
How will you know how much coverage to buy? Well, you’ll need a lot more information than just the value of your home. You will also have to do what is called “taking a home Inventory”. this can help you decide how much and what types of coverage you will need to purchase in order to protect your personal property. Without it, you’ll have no idea how much you need to buy. If you underestimate the value of your property, your premiums will be lower but you will have to pay a lot more out-of-pocket if anything happens to your belongings. On the other hand, overestimating will significantly raise your premiums because you will be buying excessive amounts and types of coverage.
For certain things, like the structure of your home, there are very few things your policy will not cover. As far as your personal property is concerned, on the other hand, there are many different types of disasters and forms of damage that your policy will not cover. Knowing what your policy covers, and what it doesn’t, will determine how much coverage you need and whether or not you’ll need to buy additional Riders.
At certain points during the homeowners insurance buying process, you will undoubtedly hear the following terms: replacement cost, and actual cash value. These are very important terms that you need to know the difference between before you purchase a policy. When you talk about the replacement costs, you’re talking about paying 100% of what it will take to replace a brand new part of your structure or piece of personal property. Actual cash value, on the other hand, only pays for the replacement cost minus depreciation. With an actual cash value loss, you may be held more financially responsible then your insurance company forgetting something repaired or replaced.
By now, you’re probably aware that almost any major purchase you make in life will be determined by your credit score. Thankfully though, it goes a little bit differently when it comes to homeowners insurance. Homeowners insurance industry as a little bit more lenient when it comes to evaluating your credit score. Unlike other insurance companies, or Banks, you aren’t required to share your entire credit history with them before you purchase your policy.
What you are required to do instead as provide them with the past seven years of your credit history. And that history doesn’t come from all of your sources of credit; at usually just comes from things like auto insurance and health insurance payments. This is called a CLUE report. Usually, your homeowners insurance company will find a way to evaluate your clue report without you needing to take any additional action. But you do have a legal right to see your clue report before you start shopping for homeowners insurance. You should be able to get a copy of your clue report by contacting your local Department of Insurance office.
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:
Louisiana Department of Insurance
P.O. Box 94214
Baton Rouge, LA 70804