UPDATED: Mar 13, 2020
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With its beautiful forests and Green Mountains, Vermont is one of the best places to purchase a home. But in order to buy a good home, you have to buy homeowners insurance. Although the insurance purchasing process may seem complicated, it’s not quite as bad as you might think. Especially if you read our handy homeowners insurance buying guide. We can help you navigate the pitfalls of homeowners insurance so that you can protect your investment and have peace of mind.
If you’re going to by home insurance, you’re most likely going to settle on a special form policy. These are also known as HO-3. They offer comprehensive coverage on pretty much everything you need to protect – both inside and outside of your home. And they do so at a relatively affordable rate. Just look at the chart below for the amount of coverage you will be expected to purchase with a HO-3 policy.
|Type of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$200,000|
|Replacement Cost (Contents)||$100,000|
All of the estimates shown below are based on an average home value of about $200,000. Your home value may vary, and your annual premium will vary accordingly. The numbers we present to you are the best estimates that our team could gather based on all available data. But we believe they’re Fairly reliable, and a good starting point for your insurance shopping experience.
Despite some pretty sinister perils that are fairly common within the state of Vermont, the state’s average homeowner’s insurance premium is actually fairly low. As a matter of fact, it’s about 19% lower than the national average. This may have something to do with the fact that most of the insurance companies located in Vermont have been in business for over a century – some even a century-and-a-half. So they have a well-established business practice, and they know how to ensure their customers with the right cop coverage for the best value.
Shopping around for the best price rarely ever hurts anyone, and the same is true for homeowners insurance. As you can see in the chart below, you could save yourself anywhere from $200 to $300 per year on your policy. That’s a nice chunk of change on a yearly basis, and can also amount to several thousand dollars worth of savings over the life of your home.
Laws and Requirements
Some homeowners, especially first time home owners, may not be aware of this but homeowners insurance is not a legal requirement. It differs from insurance like auto insurance in this way. But if you are purchasing your home with a mortgage, like the vast majority of homeowners, then your bank may make it a mandatory requirement. After all, until you finish paying off your mortgage, the bank still taglione your house. And they want to protect their investment just as much as you would if you owned your home outright.
Taking a Home Inventory
Do you know how much your personal property is worth? Well, if you’re shopping for homeowners insurance, then you definitely should. Knowing the exact value of your personal property is an essential step in purchasing the best coverage for your money. Overestimating the value of your goods can lead you to purchase too much coverage, which make you end up wasting money on inflated premium costs. But under estimating your property’s worth is also dangerous, even if you’re just doing it to lower your annual premium. If something happens, and you need to file a claim then you may not get a sufficient payout in order to repair or replace your property. And if that happens, you’re going to be left holding a pretty hefty bill.
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Choosing What (and How Much) Coverage
The most obvious perils that Vermont residents have to worry about are hurricane-related. But those aren’t the only disasters that can befall your home and/or property:
- Winter Storms – Well the average rainfall for Vermont is only 36 inches, the average snowfall for this Northern State can be 75 inches or more. Obviously, this is going to lead to many claims being filed for damage caused by winter storms. The average HO-3 policy has a large amount of coverage for such damages. But you may want to sit down and make sure with your insurance agent exactly what is covered and what your responsibilities make be if you have to file a claim.
- Flood Damage – As we just said, Vermont generally gets less than 40 inches per year of rainfall during the warmer seasons. But just because the chance of flooding is relatively low doesn’t mean you shouldn’t prepare yourself. The National Flood Insurance Program is capable of selling you up to $250,000 worth of coverage on your home and $100,000 worth of coverage on your property. most homeowners insurance companies do not cover damage caused by floods.
- Mold – In addition to Flats, most homeowners insurance companies do not provide coverage for damage caused by mold. There are some exceptions however, and you may want to discuss them with your insurance agent. Due to the amount of rain and snowfall devermont gets each year, it’s safe to say that mold damage is a very real possibility. And you’re going to want to be covered, because repairing mold damage is a very expensive and messy process.
- Covering Your Property – Naturally, a HO-3 policy covers more than just the external structure of your home. It also provides coverage for the personal belongings that your home shelters. Most agencies recommend that you purchase at least 50% of your home’s total value in order to replace things like major kitchen appliances, furniture, and other valuables that could be damaged or lost due to a peril. But know that there are different perils covered in part C of your HO-3 policy than what is covered in part A. Make sure your agent explains the differences to you, and that you understand with those differences are before you purchase your policy.
- Liability Coverage – What do you think will happen if there is an accident on your property, and someone gets hurt? Or if someone’s personal property gets damaged while they are spending time at your home? Hopefully, you can settle things out of court peacefully and amicably. But that is not always the case. If things do get litigious, and you have to go to court to settle things, your liability coverage will cover most of your costs – assuming the accident was in fact your fault.
- Umbrella Coverage – As far as homeowners insurance goes, most insurance companies will sell you hundreds of thousands of dollars worth of coverage if you need it. But for most homeowners insurance policies, your insurer will only sell you so much coverage. If your home is worth more than what they are willing to sell you, then you’re going to have to consider umbrella coverage. These policies can sell you extra coverage – sometimes into the millions – on extremely valuable homes and personal property. But keep in mind that your premiums will be much higher.
Replacement Cost vs. Actual Cash Value
Knowing the difference between replacement cost and actual cash value is a very important part of purchasing your home insurance policy. Replacement cost will put you in the best financial position if you have to file a claim, but it will also make your premium higher each year. This is because your insurance company ends up paying 100% of the cost associated with repairing or replacing the damaged item in your claim. All you have to pay as your deductible.
Actual cash value Works a little bit differently. You end up paying more for the repairs or the replacement, in addition to your deductible. This is because your insurance company incorporates depreciation into the overall cost of the repairs. on the bright side, though, the more actual cash value coverage you purchase, the lower your annual premium will be.
How Your Credit Score May Influence Your Rate
Homeowners insurance companies generally rely on your insurance score as well as your CLUE report in order to estimate your overall credit rating. They rarely ever make hard checks on your credit, which could end up lowering your credit score. These generous, softer checks are great for homeowners because you can get several quotes from many different companies without worrying about whether or not it will have a negative impact on your credit. And the better your credit score is, the better your annual premium will be. We have some links below if you need more information on Clue reports or Insurance scores.
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:
State of Vermont
Department of Financial Regulation
89 Main Street
Montpelier, VT 05620 – 3101