Being safer rather than sorry holds true when it comes to your homeowner’s insurance policy. The annual premium price difference between a standard policy and a specialized policy may only be in the hundreds of dollars, says the president of Encompass Insurance, Tom Ealy. But the real question is how worth it are these specialized policies? Are they worth the extra hundreds of dollars?
Homeowners insurance is not just a luxury, but can be a necessity at times. Before closing a deal, mortgage lenders require that all borrowers get homeowners insurance. The mandated coverage is usually the lesser of two things: the loan amount or the insurer’s appraisal of the home value, says a mortgage broker. However, regardless of the appraisal, some homes in high-price markets face a great chance of inadequate coverage in a case of a total loss. In these situations, it is more important to insure for the replacement value of the home instead of the value of the mortgage.