Purchasing a new home is a significant achievement. It usually involves handling a mountain of paperwork. One crucial task you must address is the selection and acquisition of homeowners’ insurance. Amidst the numerous options and what can seem like an endless array of dotted lines, we’re here to streamline the process. Below we have provided essential information on home insurance, as well as, provided valuable tips to ensure your new property is properly covered.
What does homeowner’s insurance do?
Think of it as an insurance policy that protects you against all kinds of accidents. Home insurance companies provide coverage for both your home itself, as well as, your personal property. This is against damage and theft. It also covers you in case anyone is injured on your property. Furthermore, insurance can cover your personal property when you’re not at home. For example, if your luggage is stolen while traveling, you’re covered. Limited coverage is available for gold, jewelry, and money as well. There are additional policies for valuable technology like laptops or other gear.
When looking at home insurance:
- Get homeowners insurance as soon as possible. Give yourself time to shop around for the best prices. If need be, opt for cheap home insurance to start. Then, increase your coverage down the road once you’ve built up a more financial cushion.
- Be prepared to pay a higher premium than the current homeowner. Unless the value of the property you are buying has gone down, you’ll be paying what is called “Replacement Cost Coverage”. That means you’re insured for the cost of rebuilding in addition to the cost of the home . Typically, agents suggest a 200% rate.
- Start shopping for home insurance quotes from agents instead of waiting to buy through your mortgage lender. A mortgage lender will not likely have the best policy options for you. An agent can help you find a policy that offers the coverage you want at the cost that works for you. They can also help negotiate additional coverage if you’d like to add.
- Arrange for a home inspection. Although not federally mandated, many insurers require a comprehensive inspection to provide a policy. They will typically deny coverage if the house does not pass. Companies don’t want to insure a building destined for problems. If your new eco-friendly home has an amazing greywater system that is about to back up and fail, you want to know about it ahead of time. This is so you can negotiate with the sellers rather than shouldering the costs later.
- Show a solid history of insurance prior to your new application. Renters’ insurance from your last home, for example, can show that you never had to file any claims – something that an insurance company likes to see.
A few notes on special circumstances
- Will homeowners insurance cover moving costs? It might, but it might not cover as much as you’d hope. It’s best to check with your agent and be sure.
- If you have any concerns that the title of your home is not clean, or that there may be unknown issues with the property, you might want to consider title insurance. Many lenders will require that you purchase title insurance for the duration of your loan, but you are not required to renew the insurance afterward if you feel confident in your property.
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