Key Considerations When Purchasing Home Insurance
Shopping for homeowner insurance is one task that home buyers typically forget to do. Its not uncommon for insurance agents to get panicked phone calls from title or escrow companies asking for a home insurance binder. Once you have agreed on a purchase offer with the seller, look for a suitable homeowner policy right away. And take note that homeowner insurance and a home warranty plan are not one and the same.
Here are key tips about buying homeowner insurance that will save you time as well as money:
Factors that Determine Insurability
Your insurance agent needs a good amount of information to be able to quote you the best rate for your policy.
These include, among others, your homes square footage and location, when it was built, the age of your plumbing and electrical systems, the type of roof you have, and the number of claims, if any, filed within the last five years.
If you live in a rural area where there is neither a nearby fire department nor a fire hydrant on the street, you may be declined insurance. In this case, you can ask for a quote from a surplus-lines or specialty company, but dont expect it to come as quick.
Working with Deductibles
With a higher policy deductible, you will be able to save more money. Insurers typically offer discounts beginning at $500 deductibles, going up as your deductible increases. There is a maximum deductible amount that insurance companies allow, and in most cases, this would be $10,000. Be careful though as your mortgage company may not allow you to get more than $1000 as deductible, so clear this up with your lender before you proceed.
How Much Insurance to Get
Take note that insurance firms are not going to include dirt in the coverage. So if the house you want to buy comes with a huge yard, dont be surprised to get insurance that is a lot less than the price of the property. Coverage is only for the home, which does not include the land.
The good news is, you have lots of options that you can tailor your home insurance policy with.
One example is liability coverage, which people all too often overlook. This will protect you from claims that arise from property damage as well as bodily injury.
Any credits for which are eligible, take advantage of them. If you have an alarm system that is hooked to a monitoring station, you could easily get up to a 10% discount. If youre above 50, you may also get a discount.
Knowing Your Policy
Speak to your agent and examine your home insurance policy at least every three years. Markets evolve, your needs change, and even coverage changes. Your insurance should always be updated because, after all, you can never tell when youll need it.