If you are not overly familiar with purchasing home insurance for your house, there might be some terms you do not understand that relate to homeowner's insurance. Understanding important insurance terms can help you choose the right policy and coverage, and here are three important terms you should understand when buying home insurance.
Deductible
Deductible is a common word in the world of insurance, and it is a very important term to understand. You will have to choose the deductible for your policy, and this is why it is important to understand what a deductible is when buying home insurance. The amount you select as your deductible represents the amount of money you must pay when filing a claim. This is the amount that the insurance company will not pay for your claim, but they will pay anything above the deductible amount if they approve your claim. Choosing a lower deductible is beneficial if you ever file a claim, but it may cause your premiums to cost more for the policy.
Binder
A second term you should understand when buying home insurance is the word binder. A binder is something that refers to a temporary agreement for home insurance. When you first purchase a home insurance policy, the company that provides the policy will give you a form called a binder. This form is designed to show that you have insurance on the house, but it is only a temporary thing. When your policy becomes official, you will receive documents that show that you have a permanent home insurance policy in place. If you are buying a house, you will need to bring the binder with you to closing to prove you have insurance.
Endorsement or rider
One other term you should understand when buying insurance is the word endorsement. This is also sometimes called a rider, though, but it depends on the insurance company. These terms refer to the same thing, which is an extra type of coverage you have on your policy. People sometimes need to add endorsements or riders to obtain enough coverage for the things they own. For example, if you own a very expensive painting, you will need to add a rider to cover this item with insurance. If you do not, the insurance company will not pay for it if something happens to it.
If you need a home insurance policy, it is important to understand terms like these ones. To learn more, contact an insurance company, such as Angel Auto Insurance, today.
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