Homeowners insurance, which is also called property insurance or hazard insurance, covers a property from loss. These policies cover a variety of expenses, such as items inside the home, the cost to replace the home and loss of use costs such as staying at a hotel during repairs. Mortgage companies require the purchase of property insurance on a home. Estimating this cost will assist in planning your home buying budget.
Estimate the home's value. Property insurance is typically based on the value of a home. Find an estimated property value through a real estate valuation website. For a new home purchase, the real estate agent can provide a market analysis on the home.
Calculate the estimated value of property insurance. Generally, the cost of insurance can be estimated by dividing the home's value by 1,000, then multiplying the result by $3.50. For example, on a house value of $200,000 the cost is $700 annually.
Locate reputable insurance agents in your area. Professional associations, such as the National Association of Professional Insurance Agents, can help.
Request quotes from a few agents to find the most affordable policy. Remember to ask about multi-policy discounts. Some insurance agents provide a discount for buying property insurance, auto insurance and life insurance at the same agency. This will drive down the cost to insure your property.
Purchase extras, such as earthquake insurance. There are some items, such as earthquakes, excluded from basic homeowner's insurance policies. Depending on where you live, talk with your agent about adding coverage.
Ask your mortgage company about an impound account. This lets your mortgage company collect your a proportion of your property insurance costs each month, so you can spread the cost of the annual premium. The mortgage company then pays the insurance company from your impound account when the premium falls due.
If you don’t set up an impound account, pay your property insurance on time. The mortgage company will “force place” property insurance if there is a lapse in coverage. This means the lender buys a policy on your behalf. Force placed insurance is very expensive.