Choosing the right Arkansas homeowners insurance means knowing the basic facts about what you are buying and why. Arkansas homeowners insurance can be complicated at first glance, but once you begin to understand the concepts and some of the basic facts, you will not feel so overwhelmed and will be ready to make the right decision on which homeowners insurance policy is the best for you.
Homeowners Insurance Doesn’t Cover Your Land
When searching for homeowners insurance coverage you should not include the value of the land when determining the extent of your needed insurance coverage. Your policy will cover your home and a certain amount of personal items, but the lot that the house sits on is not part of your homeowners insurance.
This comes in handy when you are trying to determine how much coverage to get. For example, if you paid $150,000 for your home, you do not need $150,000 worth of coverage for your home because part of that $150,000 includes the cost of the land.
PMI May Be Necessary in Addition to Standard Coverage
Private Mortgage Insurance (PMI) will be necessary if you do not put down at least 20 percent of your new home’s appraised value as a down payment. PMI is insurance that is separate from Arkansas homeowners insurance and is designed to protect the lender in case you cannot pay the mortgage; however, you have to pay this, generally in monthly premiums.
Once you have raised your equity in the home, either by principal payments or an increase in the appraised value of your home, to over 20 percent, you can drop the PMI premiums. PMI does have one positive for you; it is designed to allow those who cannot place a large down payment on a home to still get affordable interest rates.
Insurance Does Not Cover Wear and Tear
Your Arkansas homeowners insurance is designed to cover things that happen to your home and belongings caused by unforeseen occurrences. Expected maintenance due to wear and tear is not included. If you have a wind and hail endorsement on your policy, then you will be covered if a tornado blows the roof off your house. However, if your roof begins to leak due to age and lack of maintenance, then your insurance will probably not cover that repair.
You Can Update Your Policy
If circumstances change that affect your Arkansas homeowners insurance policy, then you can update your policy upon renewal. There are a number of things that could change that would need to be noted on your homeowners insurance policy. If a new fire station was built close by, you could see a drop in your rates. If you just bought a dog that is considered somewhat dangerous, you may have to pay a little more for your homeowners insurance. Even if it is something that will increase your rates, you should still inform your Arkansas homeowners insurance company to prevent your policy from being invalid and guard against the likelihood of the company not paying out on a claim.
Insurance Companies Do Not All Charge The Same
It is a common misunderstanding that one Arkansas homeowners insurance company will charge basically the same as all of the other companies. This is not the case however, and is the best reason for you to take some time to research Arkansas homeowners insurance companies and to compare their rates for your home.
Online is a great way to get multiple Arkansas homeowners insurance quotes in a matter of minutes. You can quickly distinguish which companies are willing to offer you the most competitive rates, which will allow you to make the most economically responsible decision about your Arkansas homeowners insurance.