Home Insurance Buyers Guide First Time Buyers

Home Insurance Buyer’s Guide: First Time Buyers

Congratulations! You’re a homeowner at last. And while the financial responsibilities of having a mortgage, property taxes, and homeowners’ insurance can seem overwhelming at first, you’ve made an investment in your future that can bring security, comfort, and peace of mind. With all of the stress and hassle of house-hunting, placing an offer, and closing, you may not have had much time to think about buying home insurance. But buying home insurance is an important process that you really ought not to go into blindly.

Ultimately, you want to maximize your financial security and protect your investment. If you’re a first-time home buyer looking to get the right home insurance policy, then there are just a few tips you’ll need to keep in mind.

Home Insurance Buyers Guide First Time BuyersThe first thing that you’ll need to do before buying home insurance is to access your needs. Grab a notebook, take a seat, and make a list of all of the factors that could affect your first time home buyer’s insurance policy. Take into account factors such as the size and age of your home.

You’ll also want to note if your home is in a high-risk area for flooding, hurricanes, or other natural disasters. In addition, carefully consider the contents of your home and how much it would cost you to replace them in a worst-case scenario. This will help you to create an idea of your requirements when it comes to buying a home insurance policy.

After you determine your needs, you’re ready to learn about what home owners insurance can do for you. You will want to carefully review each portion of your policy when buying home insurance. Three primary areas you’ll need to understand are: structural, contents, and liability coverage.

Liability coverage is a basic part of most home insurance policies. This will protect you in the event that someone gets injured on your property. Make sure that your liability coverage is enough to protect all of your assets, or you may live to regret it. For example, say your liability coverage only protects you up to 100,000 dollars and someone sustains serious injury on your land. If they choose to sue you for more than 100,000 dollars, your assets above that initial 100,000 will not be protected.

Structural coverage protects the actual structure of your home. One of the most important decisions you’ll need to make here will be whether you want replacement cost or cash value cost coverage. In the event of total destruction of your home, cash value coverage will pay the total cash value of your home. With replacement coverage, your insurance company will be responsible for completely replacing the home.

The important difference is that cash value coverage just pays a selected portion of what the home is worth including market deprecation. Conversely, replacement coverage pays to have your home totally replaced with materials that are of the same or similar value to the materials your home was made of. This type of coverage will cost you more annually, but in the event of a disaster that destroys your home, replacement coverage is much more advantageous.

Basic home insurance will cover some of the contents of your home in the event of damage caused by covered incidents. However, many home owners opt to purchase additional riders to cover particular possessions. Basically, if you own highly valuable personal possessions such as fine art, expensive silverware and/or rugs, antiques, or fine jewelry, you’ll need to purchase an extra rider in order to fully protect these items. Too many home owners have been shocked to discover that their basic home insurance did not cover the theft of an expensive watch or piece of art. The great news is that home insurance riders aren’t very expensive. You can spend a little to insure a lot.

One more rule that all first time home buyer’s need to keep in mind when they are out shopping for a home insurance policy is that while it’s okay to be thrifty, it doesn’t pay to be cheap. Remember, your home is probably your most valuable material asset. Protect it well with the right home insurance policy and you’ll be that much closer to true financial security.