Friday, September 4, 2020
Tips for Buying Homeowners Insurance
for First Time Buyers
Buying homeowners insurance is
buying peace of mind for what is probably your biggest investment. While it’s
optional if you’re paying cash for your new home, it’s required if you’re
obtaining financing. In fact, your mortgage company won’t allow you to close on
your new home until you have an insurance policy. Whether you’re forced to have
homeowners insurance or not do you know what you’re actually buying? Below
are just some of the things to consider when purchasing homeowners insurance.
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| insurance tips |
Selecting
an Insurance Carrier
All homeowners insurance companies
are not created equal! Shopping around for homeowners insurance is much like
shopping around for a mortgage. In order to get the best rate and coverage,
you’ll want to work with a local broker. Not just any broker though, one who
has access to as many carriers as possible. If the broker is only able to write
insurance through a few carriers your options will be limited and you may not
be getting the best coverage for the rate.
Cheapest
Rate
Most people are inclined to go with
the cheapest insurance policy thinking it’s all the same, but it’s not. What’s
actually covered and who the insurance carrier is will greatly vary. In
addition to the shopping rate always ask your agent to shop the quality of the
carrier too. As the saying goes, you get what you pay for, sometimes the
cheapest rate is not your best bet.
Investigate
the Carrier
Even when you’re working with a
reputable broker, you’ll still want to do your own investigation into the
insurance carrier. Find out their financial rating with the state. You can also
check the better business bureau along with insurance forums. Finding out their
claims-paying practices and financial stability is key.
Why? Because in a catastrophic
scenario, like a hurricane, you will probably be one in thousands of
policyholders calling the insurance company to file a claim. If the company has
a history of bad claims practices you could be left in a long line that’s going
nowhere.
If the carrier is not financially
solvent, which means they don’t have the funds to pay your claim, you could be
left with nothing. In the state of Florida if your insurance carrier goes out
of business you can go to the state guarantee fund. However, if your home was a
total loss and worth $500,000 the state may only cover $300,000. So by “saving”
a few hundred dollars purchasing the cheapest policy could cost you hundreds of
thousands of dollars in the end.
Understanding
Insurance Coverage
Do you know what you’re getting when
you buy homeowners insurance? When purchasing a new homeowners policy, it is
important to understand the different types of coverage you’re getting. Any
good insurance agent will tell you how much coverage you need to protect your
investment. They will also give you a brief overview of the other coverage
options on the policy. You’ll have standard coverage along with some optional
coverages.
Standard
Coverages on Your Homeowners Insurance Policy:
Dwelling Protection: Covers damage to the home and attached structures,
such as a garage or fence attached to the home.
Other Structures Protection: Covers stand-alone structures on your property, such
as a fence, carport, toolshed, and mailbox
Additional Living Expenses Coverage: Also called “loss of use.” This helps pay for the
additional out of pocket expenses such as hotel or motel. It also includes
meals and other basic living expenses while your home is being repaired or
replaced.
Personal Property Coverage: Pays to repair or replace all of the items that you brought
into the home. This portion of the policy covers clothes, dishes, furniture,
linens, and anything else that can be carried out of the home.
Buying
homeowners insurance is buying tranquility of mind for what is probably your
biggest investment. While it's optional to pay cash for your new home, it's
required when you get funding. In fact, your mortgage company will not allow
you to close your new home until you have insurance. Whether or not you are
forced to take out homeowner insurance, do you know what you are actually
buying? Here are just a few of the things to consider when buying homeowner
insurance.
Choosing an
insurance company
All homeowners'
insurance is not the same! Shopping for homeowners insurance is similar to
shopping for a mortgage. To get the best rate and coverage, you should work
with a local broker. Not just any broker, however, one who has access to as
many carriers as possible. If the broker is only able to write insurance
through a few carriers, your options will be limited and you may not get the
best coverage for the fare.
Cheapest price
Most people are
inclined to go with the cheapest insurance thinking it's all the same, but it's
not. What is actually covered and who the insurance institution is will be very
different. In addition to the purchase rate, you always ask your agent to also
purchase the quality of the carrier. As the saying goes, you get what you pay
for, sometimes the cheapest price is not your best bet.
Investigate the
carrier
Even if you
work with a reputable broker, you should still conduct your own investigation
of the insurance institution. Find your financial valuation with the state. You
can also check the better business office along with insurance forums. It is
crucial to find out their claims and financial stability practices.
Why? Because in
a catastrophic scenario, like a hurricane, you're likely to be one of thousands
of policyholders calling the insurance company to file a lawsuit. If the
company has a history of bad claims practices, you could be left in a long line
that goes nowhere.
If the carrier
is not financially solvent, which means that it does not have the means to pay
your claim, you could be left with nothing. In the state of Florida, if your
insurance carrier leaves business, you can go to the state guarantee fund.
However, if your house had a total loss and a value of 500,000 US dollars, the
state can only cover 300,000 US dollars. By saving a few hundred dollars,
buying the cheapest policy could end up costing you hundreds of thousands of
dollars.
Understanding
insurance cover
Do you know
what you get when you buy homeowner insurance? When purchasing a new homeowners
policy, it is important to understand the different types of coverage you
receive. Every good insurance agent will tell you how much coverage you need to
protect your investment. They also give you a brief overview of the other
coverage options for the policy. They have standard coverage along with some
optional covers.
 |
| insurance tips |
Standard
coverage for your homeowner insurance:
Housing
protection: Covers damage to the house and to the attached buildings, such as a
garage or a fence attached to the house.
Other
structural protection: Includes standalone structures on your property, such as
fence, carport, tool shed, and mailbox
Additional cost
of living coverage: Also known as "loss of use". This helps to pay
for the extra expenses out of pocket such as hotel or motel. It also includes
meals and other basic living expenses while your home is repaired or replaced.
Personal
Property Coverage: Pays to repair or replace all items you have brought into
the house. This part of the policy includes clothes, crockery, furniture, bed
linen and everything else that can be done from the house.
Liability
coverage: Pays out when you are sued by someone for an infringement on your
property. It also pays off if you are responsible for an injury outside your
property. By reducing the liability cover for your policy, you save cents
compared to what you lose in the event of a claim. Also, make sure you don't
create adhesion gaps by adding elements such as trampolines and pool slides.
Check with your agent to see if the carrier allows these items. Most won't, and
if someone gets hurt with the trampoline or slide, you could pay the claim out
of your pocket.
Medical Payment
Coverage: Covers the cost of the injury for guests who are injured on your
property or people who inadvertently injure you or your family members while
you are not at home. This coverage occurs regardless of who is to blame.
Common optional
covers:
Water Back Up
Cover: This will cover water back into your home for broken pipes, not to be
confused with flooding that would come water from outside to inside, this
covers water from the pipes in the house.
Identity Theft
Coverage: This will help you to reimburse the cost of recovering identity
theft. Some airlines may provide an identity theft advisor to help with
creditors and bill collectors.
Planned
Personal Real Estate Endorsement: Includes higher-value items that would exceed
the standard policy limits for your policy, such as jewelry, fine art, and
collectibles.
Questions about
insurance discounts
An insurance
premium can be easily halved with discount credits. So you should ask your
agent about the discount credits that you may be eligible for. Discounts can
come through monitored alarm for fire and burglary and storm inspection
credits.
Last thoughts
Make sure you
ask questions when you buy homeowner insurance. It is important to know what
you are buying and what it covers. Never assume that your policy covers
everything related to your own domestic ity, because that is not the case.
Flooding is a prime example. Your homeowner's insurance won't cover a flood,
which is a completely separate policy.
In addition to
knowing what you're buying, it's just as important to know who you're buying it
from. Buying homeowner's insurance through an airline that is financially
unsteady or has bad claims practices is preparing for disaster. The cheapest
homeowner's insurance is not always the best policy.
Please consider
spreading and sharing the word; Tips for buying homeowner insurance for
first-time buyers
About the
author
Top Wellington
Realtor, Michelle Gibson, wrote: "Tips for buying homeowner insurance for
first-time buyers"
Michelle has
specialized in residential real estate in Wellington Florida and the
surrounding area since 2001. Whether you want to buy, sell or rent, it will
guide you through the entire real estate transaction. When you're ready to work
michelle's knowledge and expertise for you, call her or email her.
Service areas
include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm
Beach, Loxahatchee, Greenacres and more.
this article is adapted from this