Protecting Your Investment

Buying a home is one of the most important decisions we will ever make, and it’s also one of the most stressful. Choosing a house that has everything we want, from location to size to aesthetic appeal, is time-consuming and exciting and downright scary. The process can take months and involves house hunting, figuring out the financing, and a whole lot of waiting. Seeing the result of careful saving and knowing that our dreams will soon become a reality is an exciting experience, but the waiting is terrifying. What if something goes wrong?

It’s not just the potential of not getting the house that we want that’s so frightening, however. Buying a home is the single most important purchase we will ever make. A home is an investment. Whether we anticipate living in that house for the rest of our lives or it’s a starter home we’ve purchased with the intent of buying something bigger in a few years, we are investing our money in something that we hope will become more valuable with time.

Because our home is such an important financial investment, it is imperative that we protect that investment. If you’re like the majority of Americans, when you purchase a home you take out a mortgage. A mortgage company will not lend you the money to purchase a house unless you can prove that you are protecting that investment; you have to have insurance. There’s no getting around it. No insurance? Well, then you have no protection, will get no mortgage, and thereby no house.

Homeowners insurance helps a homeowner deal with the financial consequences if your home is damaged or destroyed. It also protects you if someone else hurt while on your property. A homeowner’s insurance policy helps owners cope with the financial consequences. Homeowners insurance in Arizona is actually two kinds of insurance, hazard and liability, rolled into the same policy and giving you protection against potential damage or injury.

Hazard insurance can cover either the cash or replacement value of your home and belongings in case your home is damaged or destroyed by fire, storms, accidents, hooligans, or whatever. Liability is for injuries to others that could happen on your property and will pay medical expenses. You can also add coverage for things like jewelry or business equipment that exceed the limits of what your policy will cover. When you buy insurance for your home, it’s important to understand how to make sure you are getting the coverage you want and avoiding some of the biggest insurance mistakes people often make.

A mortgage company only requires that you get enough insurance to pay back the mortgage, but if you’re putting a down payment on the house and only insure the mortgage amount, you are underinsured. The biggest mistake homeowners make is only insuring what the mortgage company requires or the current value of the home. Two-thirds of all homeowners do not have enough insurance. You want to get homeowners insurance in Arizona that covers the replacement cost of your home.

Another mistake is assuming you have flood insurance or mold coverage. Ask your insurance agent whether these are included and consider getting those added if they’re not. People also assume they have one flat deductible, but some things, like wind damage to a roof, may be specifically listed in your policy as having a deductible that is a percentage of the home’s value. This is a potentially expensive oversight, so be sure you know what’s covered and at what deductible level. Knowing how to avoid these common insurance mistakes will help you protect your home and your investment.

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