When it comes to purchasing a home, there is nothing more important to buyers than making sure they know all of the upfront costs associated with the new home purchase as well as the ongoing monthly costs. One thing many first time home buyers overlook is the homeowner’s insurance policy that is needed on every home. Here are some things to know when purchasing homeowner’s insurance.
1. Credit is Important! Many insurance companies will base your insurance rate on your credit score. It will cost on average about 29% more to get home insurance if you do not have good credit. Therefore having good credit provides you with access to the best options that are out there for you.
2. Adequate Coverage! Make sure you are getting adequate coverage to rebuild your home should it be completely destroyed. Many buyers consider the price of the insurance policy only and not what it covers. Only later when a catastrophe hits do they realize they did not purchase enough coverage to build the same size or quality of home.
3. Optional Coverage! Homeowner’s insurance covers the structure of the home but may policies do not cover destruction due to natural disasters, neglect or to personal property. Therefore many homeowners should consider adding additional coverage for water backup, earthquake, mold or jewelry theft or disappearance.
4. Deductibles and Discounts! Homeowners can reduce their monthly insurance premiums by considering larger deductibles. Ask your insurance agent for a few payment options with different deductible amounts. Also, there are discounts for multiple policies so if you insure your car and your home with the same company, you will receive a discount. Also, certain professions will receive discounts such as teachers, policemen, firemen, doctors and nurses so be sure to ask your insurance agent.
5. Prior Claim Checks! Be sure your insurance agent performs a background check on the property to see if any prior insurance claims have been filed on the property. This is an important piece of information while still negotiating on a property. It may bring to light hidden defects of the property or it may confirm or discredit the information on the property disclosure. Either way, this is key information every buyer should have upfront. Make sure your insurance agent offers this service or get a second option from an agent that does.
As you can see, there are several things to consider when purchasing homeowner’s insurance. Taking the time to ensure you are getting the best policy that is right for you is key since you may not review the policy again for another year or more. Homeowner’s insurance is just one piece of the puzzle when purchasing a home, but it is an important one!
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