Buying and moving into a new home is one of life’s great experiences, especially if you’re buying your first home. From getting that pre-approval to the “yes!” response on an offer to closing and moving in, every step is exciting. And while the process is engaging and fun, it’s important to prepare for moving day […]
3 tips for finding the right home insurance
Buying and maintaining a home requires a lot of responsibility, one of which is making sure that you have the right home insurance. Home insurance is a necessity and something lenders will require you to have. Homeowners insurance policies generally cover destruction and damage to a residence’s interior and exterior, the loss or theft of possessions, and personal liability for harm to others.
Finding the right home insurance for you is essential in staying within budget and getting the coverage you need. It starts with three basic levels of coverage, actual cash value, replacement cost, and extended replacement cost/value, and can extend from there. Here are some tips to get you started in the right direction.
Get quotes and recommendations
Policy rates are typically determined by the insurer’s risk of you filing a claim. They will take into account past claim history associated with the home, the neighborhood, and the home’s condition. Shop around and get quotes from several places and recommendations from friends and family who have purchased insurance.
Know your budget and what you need covered
When calculating your monthly budget, it’s important to take home insurance into consideration and what should be covered. You want to be able to afford your home insurance in addition to other homeownership costs. How will the difference coverages like actual cash value versus replacement cost affect your budget?
Many insurance companies will give you a discount if you decide to bundle your home insurance with other insurance contracts with them, such as car. This can help you save on premium costs, but before bundling, make sure that it’ll benefit you in the long run.
You can add the costs of home insurance to your mortgage escrow account so you can rest assured that it will be paid on time, every time. In this case, your mortgage lender maintains the account and when you pay your monthly mortgage payment, you also pay into this account. Ask your lender about your options.
Understand where you live
If you live in an area that is prone to natural disasters like flooding, you may be required to purchase additional insurance. This is because standard home insurance often doesn’t cover flood damage. You may have to acquire an elevation certificate, which shows “the location of the home, lowest floor elevation as compared to base flood elevation (BFE), building characteristics, and flood zone.” But under Risk Rating 2.0, an elevation certificate is no longer required to purchase coverage, though the option is available for buyers should they want one.
Buying a home is an investment, and part of that investment is protecting it, and your wallet, if something should happen. When budgeting for your home purchase—and the expenses that come after—it’s critical that you keep home insurance in mind. Ask questions to ensure you have the right amount of coverage at the right price!