Several weeks prior to your closing in Massachusetts, you should start the process of shopping for homeowner's insurance. It's a good idea to begin looking soon after your offer has been accepted. There are dozens of carriers available so making choice can be difficult. Get recommendations from friends, co-workers or your Buyer Broker.
Insurance companies will ask you a number of questions that will affect the premium and your coverage. Be prepared to be asked the following:
- Is the property in a flood zone?
- Does the area get a lot of storms?
- Is there a fire hydrant nearby?
- What is the square footage of the home?
- How old is the plumbing and electrical?
- When was the home built?
- How many claims have been filed over the past 5 years?
- Does the home have a history of water problems?
- Is there vandalism and crime in the neighborhood?
- What is the type and age of the roof?
You can save money on your insurance cost by having a higher deductible on your policy. Typically, deductibles start at $500 with some companies offering up to $10,000. Be careful, however, since your lender may have its own requirements. Some mortgage companies will not allow to you to exceed $1,000. So, check with the lender prior to opting for a high deductible policy.
A standard homeowner's insurance policy provides four types of coverage: 1) Coverage for the structure of your home; 2) Coverage for personal belongings; 3) Liability protection; 4) Living expenses in the event you are temporarily unable to live in your home.
Property Structure Coverage
Most standard policies will pay to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or any other disaster that is listed on the policy. They will not ordinarily pay for flood or earthquake damage. If you want or need this coverage it is available at an additional cost. In determining how much insurance you need to cover your home, your agent will calculate the cost of rebuilding the structure at current construction costs. The cost of the land is not included in this figure.
In case of fire, hurricane or theft, your furniture, clothes, sports equipment and other personal items are covered. The coverage is usually 50% to 70% of the amount of insurance you have on your home. As an example, if you had $100,000 worth of insurance coverage on the structure of your home, you would have $50,000 to $70,000 worth of coverage on your belongings.
In order to calculate the proper amount of coverage you need for personal items you take an inventory of everything you own and be able to put an approximate price on those items. As part of your inventory take photos or videos of your items and place them in a fireproof safe. You can insure personal items at cash value or replacement cost. Cash Value will pay the cost of replacing your items minus depreciation. Replacement cost will reimburse you for the cost to actually replace them. If you have jewelry and silverware, there are usually limits to their coverage in your homeowner policy. If you want to insure them for full value, speak to your agent about a floater policy or rider with no deductible.
This is to protect you against lawsuits in the event someone is injured on your property. There is also a provision that will cover an event in which you, your children or pets accidentally ruin property belonging to a neighbor. It is advisable that you purchase at east $300,000 worth of liability protection.
Loss of Use
If you suffer a covered disaster such as a fire or storm, this part of your policy will pay the costs of living away from your home. It will pay hotel, restaurant and other expenses you incur while your home is uninhabitable. This coverage is typically 20% of your home insurance.
Copyright 2009 - Claudette Millette, Broker, Owner,TheBuyersCounsel - 800-392-1446, E-mail
Serving Home Buyers in: Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough