First Time Buyer? Follow These 5 Homeowners Insurance Tips
5 Suggestions for First-Time Homeowners Insurance Shoppers
Shopping for and purchasing your first home is an exciting time for anyone, but have you thought about shopping for and purchasing homeowners insurance policy to go along with it? Yes, in most instances, proof of insurance is required at closing.
Don’t get stuck settling for a high-priced premium last minute! By knowing what you need to do ahead of time and by getting the right coverage at the right cost, your new home will be protected and ready to welcome you.
1- Become a Low-Risk Buyer
The cost and coverage of homeowners insurance has a lot to do with your personal level of risk. Insurance companies may see you as a red flag (and raise your premiums) if you fall under any of the following categories:
- Low Credit Rating (lower than 620)
- Liability Risk (including owning a “blacklisted” dog breed or exotic pet)
- Frequent Filer
2- Understand the Vocabulary
Especially as a first-time buyer, the vocabulary that goes along with insurance shopping can be confusing. But by knowing exactly what you are reading when shopping for and purchasing homeowners insurance, you will also get exactly what you expect.
Claim: A formal request to your insurance company asking for a payment or reimbursement based on the terms of your policy.
Coverage: The dollar amount of risk that is covered by your policy.
Deductible: The amount of money you must pay on a specific insurance claim before the insurance coverage pays for damage repair or replacement.
Endorsement (or Rider): An amendment to your existing contract which adds, deletes, excludes, or otherwise alters your coverage.
Liability: The risk imposed by lawsuits.
Limit: The maximum amount an insurer will cover in a given time period (usually a year).
Perceived Risk: A list of factors that negatively or positively affect your home’s susceptibility (your home’s age, building materials, location, claims history, etc.).
Policy: A document detailing the terms and conditions of your insurance contract.
Premium: The amount of money that you must pay for your policy.
3- Calculate Your Budget
When you calculate how much mortgage you can afford, you can’t forget to add in your homeowners insurance since it most likely will be included in your monthly mortgage payment through your home’s escrow account.
Insurance rates vary depending on your dwelling, deductible, and coverage. However, across the nation, insurance rates typically cost between $1,000 and $3,500 per year.
One strategy for saving money is by bundling all of your insurance policies (home, auto, etc.) with the same insurance company. Doing this can give significant discounts and allow you to get proper coverage while still staying within budget.
4- Know Your Needs
More expensive insurance policies may offer more coverage, but that doesn’t necessarily mean you need it. However, make sure your policy at least includes dwelling protection, personal property protection, additional living expenses, and liability coverage.
Other (sometimes optional) additions to your policy may include earthquake and/or flood coverage, high-value items, and umbrella coverage.
5- Use the Right Agent
Never settle for a one-size-fits-all insurance policy. The last thing you want to do in the event of an emergency is deal with terrible customer service! Your best bet for getting the right coverage at the right price begins with using the right insurance agent.
By helping you fairly compare policies, options, and rates, a good insurance agent will become your trusted partner.
For more information on purchasing homeowners insurance coverage, contact Taylor Moore Insurance today!