The aim of having an insurance is to ensure that you can get back on your feet financially in case an event that causes loss occurs. This is done by paying a small fee to an insurance company.
Thankfully for those of us who might be negligent in our responsibility to have insurance on our property, we are forced in many cases by either law or contract (the mortgage contract) to carry insurance. While not many, if any, U.S. state laws require you to carry property insurance, they do often require some form of liability insurance, especially for cars. This covers repair or financial restitution to someone else besides the individual at fault. For example, the person at fault’s liability insurance pays to have their car fixed, or pays their medical bills. Fortunately, when most of us purchase the required liability coverage, we are given the opportunity to purchase the property insurance (i.e. comprehensive or collision insurance) rather easily, thus saving us from financial hardship if our own car is damaged in the accident.
When you buy insurance for your property you are simply transferring your risk. In case something happens to your property you do not bear the risk but someone else does. The risk covered against is specified in a policy. So the question is why do people still cringe at the idea of getting insurance yet it is for their benefit.
I think ‘people’ fear insurance and insurance carrier because:
1.) Someone they know had a loss that had an unfavorable outcome, in their opinion
2.) The person buying the insurance policy is not sure what to buy and not sure of the insurance contract so they fear the insurance itself
3.) Insurance carriers seem scary
4.) Insurance is ‘expensive’ and you really don’t get anything for it
5.) There are a lot of words in an insurance contract
The truth is insurance in a necessity in everyday life if you don’t want to be liable for every little thing that can go wrong.
Buying a home for you and your family is one of life’s greatest achievements. People value their homes and therefore if anything happens to this property then they are done for thus the need for home insurance. It is also important to know that getting an insurance is not just about signing , read everything even those in the finest print. There are things you should know as you get insurance.
Contact at least three companies to compare coverage. Your mortgage lender can, and probably will, require you to have homeowners insurance. You may be required to purchase additional insurance – like flood insurance. You aren’t required to buy from a particular insurance company. Instead, compare coverage, price and customer reviews. Be sure you get the right type and amount of coverage. Shop for value, not necessarily rock-bottom price. Since you’ll mainly deal with insurance companies during times of disaster, make sure the company you choose has great customer service reviews.
Escrow your insurance payments with your mortgage payments. If you’re like most homeowners, you’ll tack monthly insurance payments onto your mortgage check. The lender will pay your insurance premiums (usually your property taxes, too) out of your escrow account. Lenders prefer this option because it lets them know your insurance premiums are being paid, and their investment is well protected. Most likely, you’ll need to pay for one year of insurance at closing. Bring information about the insurance policy you have chosen and the money to cover the first year’s premium.