Many lenders require that you have a prepaid homeowners insurance policy, for your new home, at closing. They want to know that the investment that they have made, in your mortgage, is covered by a loss from flood, fire, or any other calamity that might occur around your home.

It is good business for them and for you, too. You both need to know that your investment is properly protected. However, not all homeowners insurance policies are the same and you need to consider your options before making a decision. 

Get the Homeowners Insurance You Need in Westerly

There are two types of policies available to Rhode Island homeowners and actual cash-value over replacement-value policies pay differently when claims are made.

Cash-Value – Also known as market value, actual cash-value policies calculate the replacement value of your property, less its depreciation and your deductible. This means that you should be paid for their value but may not receive enough to replace your rebuild or replace your belongings. Some items may not show any value and you may not be reimbursed for them, at all.

Replacement Value – Often called high value insurance policies, pay full replacement value for your home and belongings. It is best to have a policy that will fully reimburse you for destroyed property at replacement value. This is especially true for high value homes that cost more per square foot to build and older homes that can be costly to repair. Although a replacement policy may cost a little more per month, the reimbursement will help to give you enough funds to replace your property at today’s rates in Westerly.

How Can You Decrease the Cost of Your Homeowners Insurance?

One way to decrease the cost of your homeowner's policy in Westerly is to increase the deductible. The deductible is the amount that you must pay before your insurance kicks in. The higher your deductible, the lower the cost of your annual premium, so if you can afford $1,000 or $1,500 for an out-of-pocket expense, going with a higher deductible is a sensible decision.

Home security systems, storm shutters, and high impact windows, can also lower your annual insurance rate. Insurance companies see these improvements as added security for your home that will better protect it against storm damage and theft. Your credit rating may also have a bearing on the cost of your annual premium and the better it is, the lower your cost for the policy.

Another consideration is flood insurance. If your new home happens to be in a designated flood zone, you can rest assured your homeowner's policy will cost more. Be sure that you know this about the home you are buying so that you aren't blind-sided by a monthly cost that you may expect. 

Ask a Westerly Insurance Agent About Your Options

A local agent can help you determine the amount and type of homeowners insurance policy you need for your new home. Only you, though, can determine whether you want to pay the slightly higher cost of a replacement-value policy over an actual cost value policy. Yourinsurance agent serving Westerly, Rhode Island will have viable options and will help you find the coverage that you need, to protect your new home.