Home Insurance For First Time Buyers: What You Need toKnow

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First Time Buyer Home Insurance

As a first time home buyer, you are going to be presented with the option of purchasing home insurance as a way toprotect your investment. In fact, if you are taking out a mortgage to get the home, you will probably be required tobuy home insurance as part of your loan agreement.

Like most things involved when buying your home, insurance is going to be another decision where you can choosefrom a wide variety of options. To navigate this decision, it can be helpful to have some basic information on what

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home insurance covers, how much it costs and how to choose an insurer for yourself.

Take a look at some of the best home insurance tips for first time home buyers and also be sure to check outhow to save money on home insurance ! There are many savings tips you will find useful.

Is Home Insurance Necessary?

If you are buying a home with cash, you are not required to have home insurance. However, there are certainlyadvantages to purchasing insurance anyway. Your house is likely your largest investment, so it can be beneficial tohave some sort of protection for that investment.

If you are getting a loan for the home, in most cases the lender will require you to get insurance. The lender will wantto protect its investment, and insurance is one of the easiest ways to do that. The home insurance policy is anexpense that you will need to calculate into your budget, so make sure to clarify if your lender will be needing you toget insurance before you take the loan. You can expect the answer to be YES!

Like title insurance, it is something beyond wise to have. As Murphy’s Law goes as soon as you don’t have it, aproblem will surface. Of course, without insurance, this kind of problems could take tens of thousands out of yourpocket or even more!

What Does Home Insurance Cover?

Most home insurance policies will cover both the home and the contents inside of it, as well as structures on yourproperty like a garage or shed. It will also usually cover living expenses should the home be uninhabitable for a time.All home buyers should understand the major types of insurance. Getting the necessary home insurance forfirst- time buyers is a must!

There are several basic categories for what is covered, including:

Liability

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Liability coverage helps pay for injuries that happen on your property, like if a neighbor slips and falls on yourdriveway while helping you shovel snow, or a visitor falls on a slippery floor inside the house. It should help cover thecosts of medical care and funeral expenses if there are any. It should also cover your legal fees if someone sues.Keep in mind we all live in a litigious society today. If someone thinks they can get money from you, they will file aclaim.

Structure

There are so many ways that your home can become damaged. Storms, wind, fire, etc. Your insurance should coverthe cost of rebuilding the home after such damage, as long as the source of the damage is covered by the policy.You want to purchase insurance that will completely cover the cost of rebuilding your home.

One of the common questions people have is whether winter storm damage is covered by their insurance . Whenyou are buying your first home make sure you look over your policy carefully so you know exactly what you aresigning up for. In many cold weather climates over recent years there have been many claims due to ice dam

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damage. As a new homeowner ice dams are something you will want to know how to prevent.

Contents

Usually, if the structure of your home is damaged, at least some of the things inside the home are damaged as well.Contents coverage will most likely range from 50 and 70 percent of the coverage you have for the structure. If youhave unusually valuable possessions, you may need to get additional insurance to cover the cost of theirreplacement.

Allstate has some helpful information when it comes to getting home insurance, especially if you are purchasingyour first home. It is important to understand exactly the kind of contents insurance is right for your property.

Living expenses

If your home is unlivable, you will need to pay for food and lodging while it is repaired. Living expenses will coverthese costs. The amount of coverage will vary, so make sure the coverage you purchase is enough to take care ofyou and all your family members if necessary.

Additional structures

If you have additional structures on your property, like a workshop, garage or shed, you will need coverage for thosestructures. Some policies will automatically cover basic structures like a shed, but if you have any sort of specializedstructures that are especially valuable, make sure to verify that they will be covered.

What Kind of Events Does Home Insurance Cover?

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One of the questions that many first time home buyers will ask is “what does home insurance cover”? The eventsthat might damage your home or its contents are referred to as perils. Covered perils usually include the mostcommon events that happen in your area, including fire, lightning, vandalism, theft, explosions, hail, etc. If yourpipes burst and water damage occurs, you will usually be covered as well. There are some perils that requireadditional coverage, though, like floods.

Do not assume that your home insurance will protect you from flooding unless you get specific flood insurance. Seewhat you need to know about flood insurance here. One of the biggest take aways is just how expensive floodinsurance can be. Make sure you do your homework whenever buying a home in a floodplain. This is especiallyimportant if you are a first-time buyer and looking to have a sound budget moving forward. Flood insurance costscould change at the drop of a hat!

How Much Insurance Do You Need?

The amount of insurance you buy should be based on your specific circumstances. For instance, your coverage for5/8

the contents of your home should be calculated by taking stock of all the things that would have to be replaced byyour coverage. You will need to make a list of everything in your home and its estimated replacement cost. Onceyou have an inventory you can go over it with your insurance provider and find the right policy.

The same is true for your structure coverage. You want enough to help you rebuilt the entire home. The amount ofliability coverage you have is usually based on standards for your state. Keep in mind when you are insuring yourhome it is not necessary to cover the land on which it is built.

In other words, if your home burns to the ground you don’t need to insure for the value of the home. You should bededucting the value of the land on which your home resides when figuring out your insurance coverage. Someinsurance companies may try to get cute and suggest over-insuring your property. Don’t fall for it!

How Much Does Home Insurance Cost?

The cost of home insurance. varies considerably depending on the amount of coverage you need. The price of home6/8

insurance for a million-dollar home will be quite a bit more than the coverage for a $250,000 home, obviously. Andthe value of what you have inside your home can also significantly change the cost of your insurance as well.

For example, if you have a priceless art collection, you can expect to pay more. Value Penguin has a helpful articleshowing the average cost of homeowners insurance in all states for 2016.

There are some factors that every insurer will take into account when recommending your policy, including:

Location of the home

Your credit score

Both your claims history and the claims history for your area

How old your home is

How close you are to a fire department

Whether there is a fire hydrant nearby

Whether you have pets

How Do You Save Money On Home Insurance?

Although there are many factors that you cannot control when it comes to home insurance costs, there are a fewthings that you can do to help save money. This includes:

Upping your credit score – If you can improve your credit score, you should be able to get a better price onyour insurance.

Looking for discounts – Some insurance companies will offer discounts for different things, like havingmultiple policies with the same provider. This is mentioned above in the article about home insurance savingstips.

Get a bigger deductible – If you are willing to have a higher deductible, you can get a lower rate. Just makesure you keep enough money in an emergency fund to meet that deductible.

Hopefully, you have gotten something out of these first-time buyer home insurance tips!

How Do You Find a Good Insurance Provider?

Shop around. Talk to people that you know and trust, like friends, family, neighbors, your Realtor, etc.Do not go with the first policy presented to you. Compare different options and tweak your requirements to ensurethat you get the coverage you need at a price you can be happy with.

If you are a first time buyer who has moved into a new area see if you can find a provider who will insure both yourhome and car. The insurance savings of doing both together could be really worth it! Home insurance is somethingall buyers should have a general understanding of especially first timers.

Additional Helpful First Time Home Buyer Articles

What to know about student loans as a first time buyer via Rochester Real Estate Blog.

Increase a credit score before buying a home via Maximum Real Estate Exposure.

When buying a first home know the hidden home expenses via Anita Clark.

What not to do when buying a house via Raleigh Realty.

How to sweeten your first offer via Teresa Cowart.7/8

Use these additional first time home buyer resources to make smart decisions when purchasing your first home.

About the Author: The above Real Estate information on the home insurance for first-time buyers was providedby Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or byphone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 29+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham,Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough,Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton andUxbridge MA.

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