Homeowner insurance is an insurance policy designed to protect the borrower’s primary residence. Standard homeowner insurance policies cover the building, personal property damage, and liability.
There are four standard coverages outlined in homeowner insurance policies:
Landlords can and should hold homeowner insurance for their primary residence, but homeowner insurance cannot and should not be purchased to protect a rental property. Rental property insurance is also known as landlord insurance, and this type of policy includes specific coverage that typical homeowner don’t need (such as rent protection).
According to Investopedia, there are three levels of homeowner insurance:
Homeowner insurance won’t cover costs associated with damage to your rental property, loss of rent, natural disasters, acts of God, or acts of war.
According to Value Penguin, “the average cost of homeowner insurance is $1,680 per year and $140 per month.”
The least expensive state for homeowner insurance is Delaware with an annual average cost of $781. Colorado ranks as the most expensive state for homeowner insurance with an annual average cost of $3,383.
The driving factor behind insurance rates is the borrower’s perceived risk, so your insurance compy will examine past home insurance claims you’ve submitted in addition to claims related to that property and your credit. It’s possible that you might not be eligible for home insurance based on the number of recent past claims filed, so be sure to ask your lender about how to qualify for their policy specifically.
Additionally, the neighborhood in which the property is located, its crime rate, the building material availability, and the condition of your home will impact your homeowner insurance rate.
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