What Is Comprehensive Homeowners Insurance?
You’re researching your options regarding a homeowner’s insurance policy and you’re wondering which to get; there are so many! Then, your real estate agent, a great experienced guy, says: just get the comprehensive homeowners insurance. And you say: ok, but what is comprehensive homeowners insurance?
Comprehensive homeowners insurance is an open perils policy and it’s usually the most expensive type of homeowners insurance because it’s the one closest to being “worry-free” for you. It typically covers all the most common damages such as:
- fire damage
 - water damage not caused by flooding (which would fall under your Flood Insurance policy)
 - your personal possessions
 - personal liability
 - theft and vandalism
 
What is the price of comprehensive homeowners insurance?
Of course, the more comprehensive a homeowners insurance is, the more expensive, right? Typically, comprehensive homeowners insurance will be about 15% more expensive than a basic hazard insurance policy.
There are a number of factors that determine the comprehensive homeowners insurance price:
Your history of claims is the first one. Insurance companies keep track of people who have a history of activating their insurance, so it’s best to be cautious with the use. If there’s something you can fix with your own money, do it. If not, if you frequently file claims, your price will rise.
The area in which you live too. For a number of reasons: if your zip code is violent, the risk of theft and vandalism arises, and so does your policy. If your home is far from a fire station, you bet it will reflect on the price you pay. Too close to the dangers of an ocean or a river? Same thing.
And lastly, your personal financial information. Insurers can’t discriminate over race, sex, religion, and disabilities. But they can raise your price if you’re a financial risk to them; that is, if you have a history of defaulting and bad credit.
But because the insurance market is a competitive one, you can (and should) always try to negotiate a better deal. There are countless ways to get a more affordable home insurance; you can bundle up with other types of insurance – with big insurance companies that are not exclusive to home insurance - and get a rate discount, you can shop around and put one quote against the other… but shop around as soon as possible to avoid getting caught in a jam in the event that your insurance company refuses to insure your home.
What are the comprehensive homeowners insurance options?
You have two options concerning comprehensive homeowners insurance: Guaranteed Replacement Cost Coverage & Straight Replacement Cost Coverage.
Guaranteed Replacement is not available everywhere, but is recommended if you can afford it as it pays to rebuild your home even if the amount to rebuild exceeds your policy limit. Meanwhile, Straight Replacement is a cheaper but limited choice. It will pay to rebuild your house in the event that it is destroyed? Yes, it will. However it will only cover costs up to the policy amount - so if you choose this option, make sure to buy enough coverage to rebuild. Construction costs can escalate pretty quickly, so set the bar high!
So, did you understand what is comprehensive homeowners insurance?
If this is your first rodeo and all of this looked foreign to you, take a look at our first-time home buyers guide to home insurance and get experienced real estate agents to guide you through the exciting but complex world of real estate.
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