5 Things New Homeowners Need to Know About Homeowners Insurance

Meet Sean and Abby, a young couple who just bought their dream home in Oklahoma City. They were thrilled about their new chapter but didn't ask the right questions before securing their home insurance.

​When a severe storm hit, they discovered their policy didn’t cover the extensive roof damage. This unfortunate event highlighted the importance of understanding homeowners insurance. To help you avoid their predicament, here's a guide on what you need to know about homeowners insurance.

1. Understanding the Importance of Homeowners Insurance

Imagine the pride and joy of holding the keys to your new home, then the confusion when you face many insurance options. Homeownership is one of life's major milestones, yet many first-time home buyers enter into it not fully grasping the implications and importance of homeowners insurance. Amidst the excitement, there's a critical aspect of protection that often goes overlooked.
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Homeowners insurance isn’t simply a single policy but a collection of coverages that protect different aspects of your home and possessions against unforeseen events. It covers damages to the structure of your home and personal belongings due to events like fires, storms, or theft. Moreover, it offers liability protection in case someone is injured on your property and seeks medical treatment or takes legal action.

The relationship you build with your insurance company is also important. Having a provider that offers compassionate care and clear guidance can help you navigate difficult decisions after a distressing event, such as property damage or a liability claim.

2. Different Types of Homeowners Insurance Policies

Navigating the different types of homeowners insurance policies can be complex, but making an informed decision requires understanding your options. Primarily, there are several forms, ranging from the most basic, often referred to as HO-1, to the most extensive, known as HO-8, catering to diverse needs and property types.
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• HO-1 (Basic Form): This is the most basic policy, covering standard risks like fire and smoke, explosions, theft, and specific natural disasters.
• HO-2 (Broad Form): A step above HO-1, this policy covers everything in HO-1 plus additional perils, such as falling objects and the weight of ice or snow.
• HO-3 (Special Form): One of the most popular policies, HO-3 offers broader coverage for the home and limited coverage for personal property against all perils except those explicitly excluded in the policy.
• HO-4 (Tenant’s Form): Commonly known as renters insurance, HO-4 provides personal property and liability coverage for tenants.
• HO-5 (Comprehensive Form): This is the most comprehensive standard homeowners policy, covering both the structure and personal property against all perils unless explicitly excluded.
• HO-6 (Condo Form): Tailored for condominium owners, this policy includes personal property coverage, liability coverage, and specific coverage for the building elements that the policyholder owns.
• HO-7 (Mobile Home Form): Similar in coverage to an HO-3, this policy is designed for mobile or manufactured homes.
• HO-8 (Older Home Form): Crafted for older, historic homes, this policy covers the same perils as HO-1 but usually reimburses using actual cash value rather than replacement cost, as these homes have unique replacement requirements.

By reviewing these policy types, first-time buyers can make informed decisions that align with their specific home insurance needs.

3. Basic Coverage: What Does It Include?

Basic coverage in homeowners insurance, typically found in an HO-1 policy, includes a predefined list of perils or specific risks that could cause damage to your property. Here's a list of what standard coverage generally includes:

• Fire and Smoke: Damage caused by accidental fires or smoke.
• Windstorms and Hail: Damage from high winds or hail impacts.
• Lightning Strikes: Destruction caused by lightning.
• Explosions: Damage from explosions within or affecting the property.
• Theft: Loss or damage due to burglary or theft.
• Vandalism: Willful damages caused to the property.
• Vehicle Collision: Damage to your home by vehicles.
• Civil Unrest: Destruction caused during riots or other civil commotions.
• Volcanic Eruptions: Damage from volcanic activity, excluding earthquakes.

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Meeting only the simplest insurance needs, basic coverage can vary by insurance company, so verifying each company's offered protections is crucial.

4. Additional Coverage Options: Understanding Your Needs

Adding extra layers of protection can help ensure that your policy covers your unique needs. Here are several additional coverage options to consider:

• Flood Insurance or Earthquake Insurance: Separate policies for disasters typically excluded from standard policies, such as floods and earthquakes.
• Umbrella Liability: Extra liability coverage beyond standard policy limits.
• Scheduled Personal Property: Additional coverage for high-value items not fully covered under standard personal property limits.
• Water Backup: Protection if water backs up through sewers or drains.
• Identity Theft Restoration: Coverage for expenses related to recovering from identity theft.
• Green Rebuilding: If you're interested in repairing or rebuilding with sustainable materials following damage.

Each of these additional coverages can be tailored to personal needs and concerns, allowing homeowners to craft a more robust strategy for their home protection.

5. Factors Affecting Homeowners Insurance Rates

Several variables can significantly impact the cost of homeowners insurance. Understanding these factors can help you make informed decisions when purchasing a policy from an insurance company. Here is a glance at some prime aspects that influence your homeowners insurance rates:

• Location: The location of your home plays a pivotal role in determining your insurance premiums. Factors such as proximity to the coast, the crime rate in the area, and the distance from fire stations or water sources all come into play. Homes located in regions prone to severe weather typically demand higher insurance rates due to the increased risk.
• • High-Risk Areas: Higher premiums are common in places with greater exposure to natural disasters.
  • Crime Rates: Higher rates of theft and vandalism can lead to increased costs.
  • Fire Protection: Homes closer to a fire station or a fire hydrant may benefit from lower insurance rates.
  • Accessibility: Remoteness of the location can impact emergency services, affecting premiums.
• Home Characteristics: The structure and features of your home directly influence insurance costs. Older homes may cost more to insure due to the higher risk of worn systems leading to problems, and the potential need for more expensive repairs or replacement costs. The materials used in construction also matter; for instance, brick homes may better withstand fire and can be cheaper to insure than wood-framed houses.
• • Age of Home: Older homes may have higher rates due to outdated electrical or plumbing systems.Adding extra layers of protection can help ensure that your policy covers your unique needs. Here are several additional coverage options to consider:
  • Flood Insurance or Earthquake Insurance: Separate policies for disasters typically excluded from standard policies, such as floods and earthquakes.
  Each of these additional coverages can be tailored to personal needs and concerns, allowing homeowners to craft a more robust strategy for their home protection.
  
  • Umbrella Liability: Extra liability coverage beyond standard policy limits.
  • Scheduled Personal Property: Additional coverage for high-value items not fully covered under standard personal property limits.
  • Water Backup: Protection if water backs up through sewers or drains.
  • Identity Theft Restoration: Coverage for expenses related to recovering from identity theft.
  • Green Rebuilding: If you're interested in repairing or rebuilding with sustainable materials following damage.
  • Construction Materials: Non-combustible materials could reduce insurance costs.
  • Size of Home: Larger homes, typically, necessitate more coverage for potential damages.
  • Safety Features: Smoke detectors, security systems, and other safety features could lower rates.
• Credit Score and Claims History: Insurers may consider your credit score when determining your premium, with higher scores potentially leading to lower rates. Additionally, a history of filing multiple claims can indicate a higher risk to insurers, possibly resulting in higher premiums. Maintaining a good credit score and a clean claims history can be beneficial.
• • Credit Score: Demonstrates financial reliability, potentially leading to lower premiums.
  • Previous Claims: A history of many claims can result in increased rates due to perceived risk.
  • Type of Coverage: Choosing higher deductibles can often decrease premium costs.

By keeping these factors in mind and openly discussing them with your insurance company or a knowledgeable agent, you can make more informed and potentially cost-saving decisions regarding your homeowners insurance. Remember that this is a long-term relationship built around the safety and security of your most significant investment—your home.

Oklahoma Insurance Professionals Can Help

If you are a new homeowner in the Oklahoma City and surrounding area, never fear. Help from a local is here. We know Oklahoma insurance through and through, and since we live here, we have some skin in the game.
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As an independent insurance agency, we have access to a wide variety of insurance carriers, allowing us to find the best coverage options and premiums for your specific needs.

get a home insurance review!

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Scott Godwin
Founder

Oklahoma Insurance Professionals LLC serves Oklahoma City and the surrounding Oklahoma communities by protecting the people we work with just like we protect our own family members. Home insurance, auto insurance, business insurance, and more. We can help you find the coverage you need. ​