4 insurance tips for first-time homebuyers
March 27, 2015
Buying a new home comes with a lot of excitement but also a lot of questions, particularly about house insurance. As a first-time homeowner, you will need to ask the right questions to make sure you get the proper coverage. You never know when a natural disaster will hit, or if someone will have an accident and slip on your front step. Here are four insurance tips for prospective homebuyers to help them through the process.
Follow this guide to insurance for first-time homeowners.
1. Protect your valuables
Read your policy to understand what coverage you have on personal property. New home buyers get so wrapped up in the excitement of acquiring the house that they might forget about all the personal items they have yet to move in there. An insurance policy might only provide limited coverage for your most valuable possessions such as fine jewelry, expensive paintings or coin collections. In order to make sure those items are covered, ask your insurance provider what is and is not covered under the policy. If you're only receiving limited coverage for those items, consider getting a separate endorsement.
2. Don't forget liability insurance
Does your new dream home have a pool? Do beautiful stone steps lead up to your bold oak front door? While these features of a home might be fun and exciting, they could also be prime locations for injury.
You are liable if someone gets hurt on your property. A swimming pool is nice to relax in, but it's also a temptation for young kids in the neighborhood to take a dive. Yes, even if you have no knowledge of someone being in your backyard, you're still liable if they get hurt in your pool. Liability insurance will help cover the cost of a mishap, so you don't run into financial trouble over something which you had no control. Whether your home has a trampoline, bike ramp, pool deck or front steps among other things, make sure you're covered.
3. Know what you can afford
Paying the mortgage is only one cost among many others when you buy a home. Remember, insurance should cover the cost to replace or repair the home rather than matching what you originally paid for the it. Insurance that covers the market value of the house will force you into paying more money than necessary. Additionally, you can manage the affordability of your home with how much you pay for premiums. The higher the premium, the lower your insurance rate will be.
4. Ask the right questions
Insurance companies will take the house's history into consideration when determining your insurance rate. Older houses usually have an increased risk of experiencing problems. For example, a home that has developed a weaker structure over time might not stand the force of a tornado as well as a newer model home would.
Beyond just the brick and mortar, insurance concerns a lot of other elements in the home. Ask when plumbing and other utilities were last modified in the house. Also, find out when it was built and what updates have been completed on it.