Homeowners Insurance in Maine
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UPDATED: Aug 4, 2020
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Purchasing your first home can be difficult, but very exciting. Purchasing homeowners insurance, on the other hand, is rarely so. But unfortunately, homeowners insurance is a fact of life for many people who own their own home. Without it, any possible disaster or unfortunate incident that can befall your home will be 100% your financial responsibility.
In Maine, similar to many other states, you will probably end up purchasing what's called a HO-3 policy. The reason this policy is so popular is because of how comprehensive it is. For the most part, almost any potential disaster which could damage the structure of your home will be covered. And in most cases, your personal property can also be replaced for some portion of its cost depending on what sort of disaster damages or destroys it. Within the state of Maine, the typical price for a home ranges between $185,000 to $225,000. For this reason, our table below is an example of how much coverage you would need on a HO-3 policy for a $200,000 home:
|Type of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$200,000|
|Replacement Cost (Contents)||$100,000|
Of course, the true value of your home and belongings maybe more or less than what we use and the table above. If your actual home value is drastically different from our given example, then be sure to talk to your insurance agent very carefully about exactly how much coverage you need. They would love to sell you more coverage because it'll make them more money, but if your home is significantly less than our example, you may need to adjust your numbers accordingly.
There are few major circumstances that will have a significant influence on your yearly Premium. These include property values, the exact location of your home, and what sorts of natural disasters are common in your area. Maine is a fairly uniform state, so home insurance premiums don't exactly vary too much from one city to another. But cities such as Portland, for example, will see homeowners paying higher premiums for their coverage.
Likewise, the company purchase your policy from will determine whether you see modestly different premiums from the next city over or drastically higher premiums. If you go with the wrong provider, you could end up paying anywhere from $300 to $400 more each year for your premium. Over the life of your home, that can get very expensive.
Laws and Requirements
Guess what? There's no legal requirement that you purchase Homeowners insurance! And while that may sound exciting, the truth is that most people who own their own home end up buying it anyway. Why is this so? For two reasons. One, most people who buy a home do so with a mortgage loan from a bank.And you would be hard-pressed to find a bank that does not require homeowners insurance along with their loan. furthermore, protecting your home from potential damage and disasters make sense (and cents, too). Imagine if you didn't by homeowners insurance and a horrible disaster destroyed your home. You would be 100% financially responsible for repairing or replacing whatever was lost.
Taking a Home Inventory
The best way to make sure you buy the appropriate amount of coverage for your home is to take a home Inventory before you even think about going to your insurance provider. Yes, it is a tedious process, but it is also necessary. When you simply guess how much your property and structure are worth, you're basically taking a dangerous shot in the dark. Purchase too much coverage, and your homeowners insurance policy premiums will be unnecessarily expensive. On the other hand, if you purchase too little coverage, it could seriously hurt or completely ruin your finances in the event of a disaster.
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Choosing What (and How Much) Coverage
Most Maine homeowners insurance policies will incorporate Dwelling and Personal Property Coverage, Liability Coverage, Medical Payments Coverage, and Additional Living Expenses Coverage into a standard policy. You may also need coverage for:
- Fires - Main maybe a cold State located in a very Northern latitude, but that doesn't mean that fires and fire damage never happened. Thankfully, most standard homeowners insurance policies will cover fire and fire-related damage to a certain extent. But if you want to make sure that your home is covered in the event of a fire, be sure to ask your insurance agent to go over that type of coverage with you very carefully.
- Lead Poisoning - Unfortunately, lead poisoning damage is something that made homeowners have to deal with. If you are living in an older home, you may want to check with your insurance provider about either purchasing lead poisoning coverage, or what to do about older pipes that may be contaminating your water supply.
- Damage from Winter Storms - Obviously, it gets pretty cold in Maine. And when cold air plus moisture in the sky get together, snow tends to fall. While snow may be pretty to look at and fun to play in, it can do some serious damage to your home. Most homeowners insurance policies do protect against damage from winter storms. But in case you're worried about it, be sure to discuss it with your insurer.
- Mold and Fungi - Many insurance companies in Maine have partial or total exclusions for mold coverage. An exclusion means that your insurance company will not pay out on claims that have anything to do with mold or fungi damage. If you are worried about mold damage in your home, be sure to ask if and how much coverage you need in order to stay protected.
- Radon Gas - Yes, we know it sounds like something out of a science fiction novel, but there are a lot of homes in Maine that have a serious radon gas problem. Unfortunately, since this is usually a pre-existing and long-term problem, most homeowners insurance policies do not cover it. Ask your insurance company if they provide protection against radon gas, or if they have any resources that can help you take care of the financial burden associated with this problem.
- Covering Your Property - Your homeowners insurance policy will protect you against many different perils that could happen to the structure of your home. The protection of your personal property, on the other hand, is a very different matter. your homeowners insurance will only protect your belongings under a small and specific list circumstances. Take a look at those circumstances before you purchase your policy, and figure out with your insurance agent whether there are additional risks that may need coverage.
- Liability Coverage - You may be aware of what liability coverage is responsible for on your car insurance policy, but why would you need it for your home? Well, here's one example: say your friend is visiting and accidentally burns their hands while washing them in your sink. If this was the result of a faulty water heater making the water too hot, you could potentially be sued and held liable for your friend's injuries. But with a homeowners insurance policy, you will be financially protected in a worst-case scenario.
- Umbrella Coverage - If you own a big, fancy home with a lot of expensive personal belongings inside, then the typical homeowner's insurance policy may not sell enough coverage to adequately protect you. In this case, you will want to ask your insurance agent about something called umbrella coverage. This can help ensure your structure and your property up into the millions depending on how much extra coverage you need.
Replacement Cost vs. Actual Cash Value
If you are unclear about what the differences between replacement cost and actual cash value, odds are good that you are not alone. But you really need to understand these two terms if you want to buy the best coverage at the most affordable rate. Replacement cost is usually something attached to the part of your policy that deals with structure repairs and replacements. Actual cash value, on the other hand, is typically the amount your insurance company will pay out on a claim for personal property damage. Replacement cost covers 100% of however much it will cost to repair or replace your home. Actual cash value only pays out a fraction of replacing a brand new piece of property.
How Your Credit Score May Influence Your Rate
When it comes to your credit score, it is a fairly important factor in the homeowners insurance buying process - but it may not be as important as you might think. Don't get us wrong; your homeowners insurance company absolutely will use your credit score in order to determine how much to charge you for your annual premium. However, the type of credit report they use in order to evaluate you is not the same as what your car insurance company or a bank would use.
In most states, this is referred to as a CLUE report. In a CLUE report, your homeowners insurance provider only gets a snapshot of the last seven years of your credit history. And it only includes specific lines of credit, such as your bank loans or your car insurance premiums. Also, you have every right to get a copy of your CLUE report before you start getting quotes from insurance companies. Your state department of insurance can help get you a copy.
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:
Department of Professional & Financial Regulation
Bureau of Insurance
#34 State House Station
Augusta, ME 04333-0034
Phone: 207-624-8475 | Fax: 207-624-8599