Homeowners Insurance in Nebraska
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UPDATED: Mar 13, 2020
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You may think that buying your first home is a big enough challenge on its own; and you're not wrong. But there's one more hurdle you have to overcome on your way towards home ownership: the dreaded search for homeowners insurance. But don't worry - there are some tricks to easily finding an affordable policy with great coverage. We'll show you how.
The most popular type of homeowners insurance policy in the state of Nebraska - and also the country - is called an HO-3 policy. It's popularity comes from the fact that it provides a comprehensive amount of coverage for the price. As you can see below, purchasing an HO-3 policy will protect the outer structure of your home, replacement costs of your property, liability costs, and medical expenses.
|Types of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$200,000|
|Replacement Cost (Contents)||$100,000|
Interestingly, Nebraska homeowners get even more flexibility with their insurance policies than most homeowners in other states. If they so choose, they may raise or lower their coverage amounts for liability and medical expenses. Lowering them, of course, could save Nebraskan homeowners a good chunk of change in annual premiums. And while raising them can make their policy more expensive, they will be more protected in the event of a peril or an accident.
For a state where property values, on average, range between $150,000 - $200,00, it may seem strange at first glance to see homeowners insurance premiums as high as $2,000 or $3,000 per year (or more). The culprit for these high prices is Mother Nature. The frequency of severe weather in the cornhusker state causes a lot of damage, and forces insurance companies to pay out on many expensive claims each year. And since insurance companies hate risking their profits, they charge surprisingly high annual premiums in order to protect their bottom line.
One way you can protect yourself from excessive premiums is to make sure you shop around! We can't stress the importance of this enough. Just take a look at the chart below if you don't believe us. From one company to another, there could be anywhere from $1,500 to $1,800 in potential savings each year. Over the life of your home, that savings could end up being a small fortune.
Laws and Requirements
Luckily, homeowners insurance is one type of insurance that no government entity can legally force you to buy. And if you own your own home outright, or if you've already paid off your mortgage, then it's completely up to you whether you want to purchase it or not. People who currently have a mortgage, however, will likely be forced to purchase a policy by their bank as a condition of their loan.
Taking a Home Inventory
Another area where you can save money on homeowners insurance is to take a thorough and accurate home inventory. Yes, it's a laborious and tedious process, but it must be done. If you overestimate the value of your dwelling and property, you could be wasting thousands on excess coverage that you don't need. If you underestimate how much your home is worth, then you might have to pay out-of-pocket costs beyond that of your deductible to fix your home or replace destroyed belongings.
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Choosing What (and How Much) Coverage
The basic HO-3 policy that many Nebraska home insurance companies offer is Fairly basic, and designed to protect the insurance companies financial interests. There are certain disaster situations which may or may not be covered by your policy, such as:
- Fires - Not only is Nebraska not immune to wildfires, but accidental fires in the home can happen at any time. Between your structure and your personal property, there is plenty of coverage for damages resulting from fire, smoke, and more. But there may be a few restrictions on personal property, so make sure you talk to your insurance agent about them.
- Floods - Nebraska is also a flood-prone state. Unfortunately, most insurance companies don't provide coverage within the framework of the basic HO-3 policy. And they are usually reluctant to offer riders which protect against flood damage. You can, however, find coverage against flooding and flood-related damage from the National Flood Insurance Program (NFIP)
- Damage from Winter Storms - Nebraska and Canada are only separated by the Dakotas; so it's fair to say that Nebraska is far enough north for winter storms to be a problem occasionally. Luckily, there are many provisions for damages caused to your structure from winter storms. But if you're worried about whether the coverage is enough, just ask your local agent.
- Tornadoes - The award-winning novel Night of the Twisters wasn't set in Nebraska by accident. Nebraska sits at the northern end of "Tornado Alley", and as such, this particular form of severe weather can cause a lot of damage. Luckily, most policies provide coverage for such storms. But it's best to talk to your insurance agent and make sure you are adequately covered.
- Covering Your Property - It isn't enough to make sure the external shell of your home is protected - you'll want to make sure your stuff inside is insured, also. With an HO-3 policy, they will be; but keep in mind your insurance provider will only pay out claims on property damage in the event of a few listed perils. For more coverage, as your provider about riders and other purchase options.
- Liability Coverage - Accidents happen. But what if they happen on your property? Are you prepared to deal with the financial repercussions? Most HO-3 policies carry up to $100,000 or more, depending on how much coverage you choose to purchase. This gives many homeowners peace of mind about accidents happening on their property.
- Umbrella Coverage - Property values may be more affordable in Nebraska, but that doesn't mean you don't own lots of expensive, luxury items. You may also live in a nice, big house that costs well beyond what most homeowners can afford. But your insurer will only sell you so much coverage. If you need to purchase more, then you'll want to ask your agent about umbrella insurance. Otherwise, you bay be left paying for whatever your insurance won't cover.
Replacement Cost vs. Actual Cash Value
Are you confused about "replacement cost" versus "actual cash value"? Well, you're not alone. But we can easily illustrate the differences between them with the following example: let's say a strong wind sent a large piece of debris crashing through your roof, and it damaged several pieces of furniture on its way down. On most HO-3 homeowners insurance policies, the claim you file will pay you the replacement cost of the roof, but only the actual cash value of the furniture. You will receive exactly as much money (as determined by your insurer) as it will take to repair the hole in your roof. For the furniture, on the other hand, you won't be paid exactly as much as it takes to replace the pieces; you will be paid that amount minus its depreciation. And the older the furniture, assuming it is not an insured antique, the less you will receive for damages.
How Your Credit Score May Influence Your Rate
Sometimes, when a company has to evaluate you for financial reasons, they will run a credit check on you. Some companies perform "hard" checks, which automatically notify the major credit reporting agencies and put a mark on your record. Too many hard checks, and your credit score begins to sink like a stone.
Luckily, credit checks are different with homeowners insurance companies. They perform what is called a "soft" check, which does not leave any marks on your credit history. Usually, these soft checks only take the past 7 years of your most recent credit history into account. Furthermore, they're more likely to look at things like loan payments or payments to other insurance companies rather than, say, overdue medical bills.
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:
Nebraska Homeowners Insurance Guide
Or contact them directly through the following resources:
The Nebraska Department of Insurance
941 O Street
PO Box 82089
Lincoln, Nebraska 68501-2089
Consumer Affairs Hotline: 877-564-7323 (In-State Only)