While it is not required by law that you buy homeowners insurance in Colorado, it is required by your lender if you have financed your home. Therefore, most homeowners insure their homes. Here are some important tips to get the best coverage for you.
1. Shop around.
There are many insurance agencies offering the same coverage for different prices. Get quotes from at least 3 different companies before choosing. Don’t forget to consider your overall experience with the company in addition to price differences. In the event of damage to your home, you will want to be confident that your agent will answer questions about your coverage, and help you throughout the process.
2. Ask your company about discounts.
Many companies offer discounts if you purchase different lines of insurance through the same company, like insuring your cars with them as well. Other companies will offer discounts if you make improvements to your home that protect against damage. Examples include installing smoke detectors, installing impact resistant roofing materials, etc.
3. What about your deductible?
The Colorado Department of Real Estate Recommends that you purchase an insurance policy with the highest deductible that you can absorb. Generally, higher deductibles mean lower annual premiums. Keep in mind that in the event of a loss, it is possible that you may incur other expenses in addition to your deductible- for example, if property is damaged that is not covered by your insurance.
4. Insure for Replacement Cost, not Actual Cash Value.
This will provide the best protection in the event of property damage. Actual cash value covers the price to replace or repair property, minus depreciation. Replacement cost covers the price to replace the property with a new materials or goods that are of similar quality and materials. Many insurance policies include replacement cost coverage, but some sell it as an option. Make sure to understand your options on this matter.
Your buyer’s agent will be able to provide additional advice on choosing your home insurance and the date that you need to choose your coverage.