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Insurance

Homeowners Insurance 101: Protect Your Home

Homeowners Insurance 101 Protect Your Home - Home on Cloudy Day With Brick Path Across Green Lawn

Homeowner’s insurance is one of the most important safeguards to protect your home, belongings, and financial security. Despite its significance, many homeowners don’t fully understand their coverage or the factors that impact their premiums. In this guide, we’ll address common misconceptions, factors that affect rates, and the key information you should know when choosing a policy.

Common Misconceptions About Homeowner’s Insurance

  1. “Homeowner’s Insurance Covers Everything”
    One of the biggest myths is that homeowner’s insurance covers all types of damage. In reality, most standard policies exclude coverage for floods and earthquakes. As the most common natural disaster in the United States, over 20% of all NFIP claims and one-third of federal disaster assistance for flooding are filed by individuals outside high-risk flood zones.

  2. “My Home is Fully Covered at Its Market Value”
    Many people assume their insurance covers their home’s full market value. However, most policies focus on replacement cost—the amount needed to rebuild your home—not what it would sell for on the market.

  3. “Filing a Claim Always Raises My Premium”
    While frequent claims can increase your premiums, not all claims have the same impact. Many insurers consider the type and frequency of claims before adjusting rates.

What to Know When Choosing a Policy

  1. Understand Policy Types
    There are different types of homeowner’s insurance policies, such as HO-3 (the most common), which offers broad protection for your home and belongings, and HO-5, which provides even greater coverage. Knowing the differences can help you choose the right policy for your needs.

  2. Determine the Right Amount of Coverage
    Ensure your policy provides adequate coverage to rebuild your home and replace your belongings. According to the National Association of Insurance Commissioners (NAIC), 59% of homes are underinsured, often by at least 20%.

  3. Consider Additional Coverage
    Depending on your location, you might need additional coverage for perils like floods, earthquakes, or sewer backups. Research FEMA’s flood maps and risk index to understand your property’s risk.

  4. Look for Discounts
    Many insurers offer discounts for bundling policies, installing security systems, or upgrading your home with storm-resistant features. Be sure to ask your agent about available savings.

Factors That Affect Homeowner’s Insurance Rates

  1. Location
    Your home’s location significantly impacts your premium. Homes in areas prone to natural disasters or high crime rates typically have higher rates.

  2. Home Value and Replacement Cost
    The value of your home and the cost to rebuild it are key factors in determining your premium. Larger, more expensive homes cost more to insure.

  3. Claims History
    Both your personal claims history and the claims history of your home’s previous owners can affect your rates. A history of frequent claims could lead to higher premiums.

  4. Age and Condition of the Home
    Older homes or those with outdated electrical, plumbing, or roofing systems are seen as higher risk and may cost more to insure.

  5. Credit Score
    In many states, insurers consider your credit score when setting rates. Individuals with poor credit may pay significantly more for homeowner’s insurance than those with excellent credit.

  6. Deductible Amount
    Choosing a higher deductible can lower your monthly premium, but it means you’ll pay more out-of-pocket in the event of a claim.

Tips for Lowering Your Premiums
  • Bundle Policies: Combine your homeowner’s insurance with auto or other policies to qualify for multi-policy discounts.

  • Improve Home Safety: Installing security systems, smoke detectors, and storm shutters can reduce your risk and premiums.

  • Contact Your SandStone Account Manager: Compare quotes from multiple insurers to ensure you’re getting the best value.

  • Maintain Good Credit: A strong credit score can lead to lower premiums in many states.

  • Review Your Policy Annually: Regularly reassess your coverage to ensure it meets your needs and includes potential cost-saving opportunities.

Why Homeowner’s Insurance is Essential

Your home is likely one of your biggest investments. A well-chosen homeowner’s insurance policy not only protects your property but also provides peace of mind. Whether you’re safeguarding against natural disasters, theft, or unexpected repairs, SandStone Insurance Partners is your trusted advisor to find the right coverage and save you from financial hardship.

SandStone Insurance Partners: Your Trusted Advisor

At SandStone Insurance Partners, we specialize in helping homeowners navigate the complexities of insurance. Our expert team will work with you to find a policy tailored to your needs, ensuring you have comprehensive coverage at the best possible rate. For more information, visit our Home Insurance page.