With so much invested in a home, it's important to find a homeowner's insurance policy that will adequately protect your property and help cover the costs for any damages that may occur from unsuspecting events such as fires and natural disasters.
Homeowner's insurance is also a necessary component to securing a mortgage. In order for a closing to take place, most buyers will be asked to provide information about their homeowner's insurance policy. If issues arise this could delay the home buying process, which could ultimately lead to a transaction falling through. Home buyers should contact a licensed insurance agent or broker to assist them in their search for a policy as soon as the home is under contract.
Some factors homeowner's insurance companies may consider when providing insurance and assessing the cost include: a home's age, location, condition, construction, safety devices (i.e. smoke detectors and alarms), swimming pools, and the home's proximity to a fire department and waterways. A home's location and whether or not it is equipped with some of these features may affect the cost of an insurance policy.
A home's history and condition, such as damage from a fire or water may also be a factor for insurance companies when providing a policy. Buyers can ask the seller for a CLUE report, or Comprehensive Loss Underwriting Exchange, which lists all claims reported to an insurance company for a given property over a five-year period and shows the date of loss, type of loss, and amounts paid out.
Buyers should also be aware of their credit scores. More insurance companies are using consumer credit scores to determine their insurance risks and premiums. Obtaining your credit score before shopping for a home will provide you with more time to clear up any errors in your credit that could affect your ability to obtain insurance coverage. Good credit is also a key factor for obtaining a mortgage since lenders tend to offer better rates if you have a reliable payment history.
Lastly, in recent years since Hurricane Katrina struck the Gulf Coast, some insurance companies have become more selective about their coverage areas, such as on or around the coast, therefore home buyers should be aware that finding a policy in these "high-risk" regions could take more time. Homes located in a flood plain will require flood insurance in addition to homeowner's insurance so it's important that home seekers look into obtaining both.
Buying a home is a huge decision in life. With so much time and money invested in your property, it's important that you take the time to make sure it will be protected!
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