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How To Approach Home Insurance As A First-Time Buyer

Monday, March 15, 2021

A home sits at the end of the driveway.

The thrill of buying your first home comes with many decisions that can also be intimidating. Dreaming big, imagining your furniture layout, and planning your housewarming party is the easy part. Navigating the mortgage process, home inspections, and signing all those papers seems like a full-time job. One additional task is choosing homeowners insurance. When it is time to sign that mortgage, you will need to have your insurance in place before you can hold the keys to your new front door.

Tips For Buying Homeowners Insurance For The First Time

Mortgage companies will require proof of homeowners insurance before the closing process. You will need to shop for coverage to protect what is likely your most significant investment and asset. Homeowners insurance is designed for big losses to rebuild your home if disaster strikes. When choosing the protection level, remember that this type of insurance also covers fences and outbuildings, but not the actual land value. Before you sit down with your agent, find out information about your new home and neighborhood. Check the neighborhood crime rates, location of the nearest fire station, previous claims on the property, and the roof and HVAC systems’ age. If you have carried renter’s insurance, be sure to share that fact with your agent. Researching this information can work in your favor as all of these factors will affect your policy’s pricing.

Understanding Replacement Cost Vs. Market Value

Choosing home insurance for first-time homebuyers is a steep learning curve. There are two types of coverage, replacement, and market value.

  • Replacement cost covers the cost to rebuild based on the existing quality and type of materials in your home.
  • Market value only covers the current cash value and is tied to the housing market. It may not be adequate to replace your home entirely.

Your Independent Insurance Associates agent will be able to guide you in making the right decision between replacement and market value coverage.

Planning For Coverage Gaps

You may think your first homeowner’s insurance policy is a simple case of point and click. The hard truth is that there may be many coverage gaps in your protection that require additional coverage. In general, you are not covered for floods, earthquakes, or sewer backups. Considered as perils, your agent will help you understand your unique needs and recommend the right mix of additional protection. A burst pipe inside your house is likely covered; a burst pipe outside that floods your home is not. These are tricky decisions to navigate, which is why taking the time to sit down with your agent will give you peace of mind in determining the best insurance for first-time homebuyers.

How To Save Money On Your Homeowners Insurance

Everyone wants to save money on insurance costs. You do have options to lower your premiums. Make plans to bundle your various policies when you purchase your first homeowner’s coverage. By keeping all of your insurance needs with one company, you can qualify for lower prices for your auto, home, and life insurance. Remember to mention if you carried renters insurance, which identifies you as an acceptable risk. Another cost savings is to file a claim only if necessary because multiple or frequent claims can raise your premiums.

If you need to file a claim, remember that having a thorough inventory of your personal property will ease the process and help avoid getting denied. Take time to review your policy and coverage yearly to ensure you have adequate protection as you build equity and improve your property. 

Your local agents at Independent Insurance Associates will help you find the right coverage for your first home. We are happy to explain how your policy protects you, and we will help you find the gaps and extra coverage you may need to cover all of your assets. Contact us today to start the process of insuring your new home before your closing date. Then you can get on with planning that house-warming party with peace of mind.