ANSWERS: 1
  • <h4 class="dechead">On One Hand: Do Your Homework

    At a rate of between 0.3 percent and 1 percent of the cost of the home loan, Americans spend an average of about $481 annually on homeowners insurance, also known as hazard insurance, according to MortgageQnA. The most important consideration is what it would cost to rebuild your home from the ground up in its same location. Depending on where you live, you might also need to carry additional coverage for such natural disasters as floods and earthquakes, neither of which is covered by standard homeowners policies. And make sure your coverage could adequately replace such pricey valuables as art, jewelry or furs---even if it means paying extra.

    On the Other: Sensible Steps Can Lower Cost

    You can reduce your home insurance rates by accepting a higher deductible---the amount for which you're personally responsible before your homeowners insurance starts paying. Most homeowners policies have a $500 deductible, but if you double that amount to $1,000, you could save up to 25 percent on premiums. You could also save by buying homeowners insurance through your existing relationship with an auto insurer. And by not over-insuring. Cover the value of your home, not the land under it, which is unlikely to be damaged.

    Bottom Line

    While in the process of spending perhaps hundreds of thousands of dollars to buy a home, the relatively inconsequential cost of homeowners insurance can slip by without a lot of thought. But do your homework, ask questions of your agent and take advantage of every means to maintain a secure level of protection at a cost that's sensible and affordable.

    Source:

    MortgageQnA; How much does homeowners insurance (hazard insurance) cost?

    CNN Money.com; How much house can you afford?

    Federal Citizen Information Center; 12 ways to save money on your homeowners insurance

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