What a First Time Home Owner Needs to Know Before Purchasing Homeowners’ Insurance
If you have just purchased or looking to buy your first home, the chances are you are very excited about moving in. But before you move in to your new home you will want to investigate your options for homeowners’ insurance.
Typically the company that is holding the mortgage on your new home will want a statement from your insurance company that says you have insurance.
Secondly, you need to have insurance coverage for any and all issues from the minute you take possession of your new home.
The last thing you need is for someone to have an accident while moving furniture into your new home and you not having insurance coverage to protect yourself in case they are seriously injured and decide to sue you.
When a first time home buyer looks for a good homeowners’ insurance policy they can end up feeling confused and overwhelmed by all of the insurance terminology that they may not be familiar with.
However, the more you understand the terminology, the easier it will be to choose the right options and insurance coverage for you and your new home.
There are a lot of questions that the insurance broker will ask you. All of your answers to these questions will assist the broker in determining what the cost of your new home owners’ insurance will be.
As well, you can ask for additional coverage. Keep in mind that this can increase the cost of your insurance too.
Questions You Will Be Asked by the Insurance Broker
Type of Home
What type of home did you buy?
Did you buy an acreage, condo, townhouse, duplex or single detached home?
Home Construction
How was your home built?
What types of materials were used?
Will it stand up to bad weather?
Where you are located will determine the types of bad weather the insurance broker is talking about. For example, do you live in tornado alley, or a hurricane zone?
Specific Property Details
What is the square footage of your new place?
What year was it built?
And of course, the address of the property.
Property Value
One question that is vitally important to discuss is the value of your new home.
This includes more than the home itself.
It includes all of your interior decor, personal belongings, clothes, furniture, appliances, and even items in storage.
The insurance broker wants to know the value of your house and the value of your contents, so that if your place burns to the ground, you will have enough insurance to replace everything.
Often people under-estimate the value of their personal belongings because they want to save money on their homeowner’s insurance.
If you do this and you lose everything, you will really regret your decision to save money on something so important. Why? Because the insurance company will only reimburse you (send you money) up to the value that you initially declared when they asked you about your personal belongings.
Homeowners’ Insurance Policy Deductible
Every insurance policy, whether it is for your home or your car, comes with a deductible.
The price of your insurance is based on how high or how low of a deductible you decide to have.
If you are not familiar with the term deductible, it is the amount of money that would be subtracted from any claim that you make on your insurance.
For example, if your computer is stolen and it was worth $1,500.00 and you have a deductible on your insurance policy of $500.00, the insurance company would only reimburse you for the difference, which would be $1,000.00.
If you wanted to buy a new computer for $1,500.00, you would need to contribute $500.00 of your own money.
The insurance broker will ask you how much you want your deductible to be.
Remember that the lower the deductible amount, the more your insurance will cost, and vice versa, the higher your deductible is, the less your insurance premiums will cost you now.
Personal Liability Coverage
The insurance broker will ask you about personal liability coverage.
Do you want a million dollars in coverage or more? The standard today, seems to be two to three million dollars.
This coverage will protect you should anyone ever get hurt while they are on your property.
Serious injuries can cost a lot, so make sure that you have excellent coverage in place.
Questions You Should Ask the Insurance Broker
Standard Insurance Coverage
Depending on where you live, certain things will be included in your standard insurance policy and other things will not be included.
Ask the insurance broker for specific details.
For example, if your basement floods will your personal possessions be covered?
Will the insurance company send out someone to help you clean up the basement and will they cover the cost of cleaning any carpets or replacing any damaged flooring or drywall?
A standard insurance policy typically covers you for theft and fire.
Ask if your new policy also includes coverage for items on your property such as your garage and everything in it, as well as any storage sheds, or outdoor workshops.
Discounts
Ask if you will receive a discount on the cost of your insurance policy premiums for smoke detectors and security alarm services.
If you live in a hurricane region, ask if you will get a discount on your policy if you have hurricane shutters installed on your home.
Also ask if you will receive a discount if you combine your homeowners’ insurance with your car insurance.
Additional Coverage
Ask the insurance broker about additional coverage to your insurance policy for items such as:
- Fine jewelry, fur coats
- Electronics and computer equipment
You want to know if the insurance covers stolen, lost, or damaged items.
As well, ask if the above items are covered no matter where they are lost or what happens to them.
For example, if you travel overseas and you have your laptop and your diamond bracelet with you, and they both get stolen, or lost, will your homeowners’ insurance policy replace them.
And is there a separate deductible specifically for these items?
Most importantly, ask if these items are covered for full replacement cost and if you will receive a cash settlement.
Burning Down the House
What happens to you if there is an accident (hurricane, fire, flood, tornado) and you need to live somewhere else?
Make sure to ask the insurance broker for insurance coverage that covers the full cost of you and your family living in a temporary location, such as a full service hotel, should your house burn down, or flood, and you need to live elsewhere while it is being rebuilt.
Finding a Good Insurance Company
As a first time home owner you may feel nervous purchasing homeowners’ insurance because you do not want to accidentally miss any coverage options. Never be afraid to ask questions. And keep asking until you feel comfortable. Also, you want to make sure you are purchasing homeowners’ insurance from a reputable and well-known insurance company.
If you already own a vehicle you will most likely turn to the insurance company that you have your vehicle insurance with to buy homeowners’ insurance.
But if you are not quite sure who to go to try asking family, friends and co-workers who they use and what their experiences have been like in dealing with them. You want to make sure that you find an insurance company that will quickly be there to assist you when you desperately need their help.
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