“You bought a home? Congratulations! Now here are even more stacks of paperwork!”
You have a lot of new responsibilities with your new home, including choosing and buying homeowners’ insurance. Although it can seem like the options and dotted lines are endless, we’ve outlined the necessary information on home insurance and tips on getting your new abode covered.
What does homeowner’s insurance do?
Think of it as an insurance policy against all kinds of accidents! Home insurance companies provide coverage for both your home itself as well as your personal property against damage and theft and covers you in case anyone is injured on your property. Your insurance can also cover your personal property when you’re not at home – meaning if your luggage is stolen while traveling, you’re covered. Limited coverage is available for gold, jewelry, and money as well, with additional policies for valuable technology like laptops or other gear.
When looking at home insurance comparisons…
- If you’re wondering when to get homeowners insurance on a new home, the answer is ASAP. Give yourself time to shop around for the best prices so that you’re not stuck buying something expensive at the last minute. If need be, opt for cheap home insurance to start and 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, but even 175% will give you a decent cushion.
- Start shopping for home insurance quotes from agents instead of waiting to buy through your mortgage lender, since they 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, and negotiate additional coverage if you’d like to add more than just the basics.
- Arrange for a home inspection. Although not federally mandated, many insurers require a comprehensive inspection to provide a policy and will deny coverage if the house does not pass – and for good reason! 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 so you can negotiate with the sellers rather than shouldering the costs later.
- If you can show a solid history of insurance prior to your new application, the company is more likely to approve your 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
- Wondering if homeowners insurance covers moving costs? It might, but it might not cover as much as you’d hope. Best to check with your agent and be sure you’re clear on deductibles and other fine print while you’re in transition.
- Should I get title insurance on a new home, you ask? Good question. If you have any concerns that the title of your home is not clean, that there may be unknown issues with the property or any other concerns, you might consider it. Many lenders will require that you purchase title insurance for the period of the loan, but you are not required to renew the insurance afterward if you feel confident in your property.
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