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First Time Home Buyer? 6 Top Tips on Finding the Best Home Buyer's Insurance

By January 6, 2020News

Buying a home is by far one of the most significant investments of your life, but the process, from inspections to negotiations and financial preparations, can be exhausting.

Before you move in and start making new memories in your dream home, you need to find the best home insurance. It’s crucial that your home is well insured, but the process can prove to be quite complicated on your own.

Getting the best insurance policy, from the right provider at the right price, is not as straightforward as we’d all like it to be. About 59% of homeowners are underinsured. This is not a good position to find yourself in when disaster strikes.

To make things easier for you, we have gathered seven tips that will help you get the right insurance policy for your home. Let’s dive right into it, shall we!

  1. Get Your Home Buyers Insurance Immediately

Do not make the mistake of waiting too long before getting your homeowners insurance coverage. Some homeowners think they can get settled in their new home before thinking about this step, however, most mortgage lenders require proof of insurance before the closing date. Shopping around for the right policy will take time so it’s best to start that process upon acceptance of your offer to purchase the home, making sure that the coverage covers your home for possible needs.

  1. Compare Different Insurance Companies

All insurance companies are not the same, and all of them will make you different offers. Insurance companies vary in terms of cost, customer service, and most of all, coverage limits. Many are limited in what they offer because they have their own products. We’re happy to shop around for you to find the right coverages to protect you at the right price.

  1. Ensure You Understand What Each Coverage Offers

When you purchase homeowners insurance, you’ll be protecting a valuable asset, so having sufficient coverage when disaster strikes is important. Homeowners insurance typically provides two different types of coverage.

Property coverage takes care of repairs when disaster strikes. Liability coverage, on the other hand, includes coverage for a lawsuit in case someone sues you for negligence when they are injured in your home or on your property.

There are two types of property coverage: cash value and replacement coverage. Actual cash value pays for what your home or possessions were worth at the time of the disaster, taking depreciation into account. This option may leave you short of the resources needed to rebuild and refurnish your home. Replacement coverage on the other hand, pays you the cost to replace or rebuild your home and its contents at today’s prices.

Most insurance policies have exclusions. For instance, most homeowners coverage does not include floods and other natural disasters, so you may want to consider purchasing additional insurance protection.

  1. There Are Different Types of Insurance Policies

Insurance policies vary. It’s important that you understand what you’re purchasing. The most common homeowners is an HO-3 which provides dwelling coverage on an open perils basis while personal property is covered on a named perils basis. By comparison, an HO-5 policy, while more expensive, is also more comprehensive, providing dwelling and personal property coverage on an open perils basis. What does this mean in real life? If a deer crashes through your sliding glass door and damages your contents, that loss would not be covered under an HO-3 but would be covered under an HO-5.

Policy language is very specific and can be confusing, so consult with your agent to better understand what coverages are available and the costs associated with them.

  1. Choose an Insurance Policy that Covers Your Lifestyle

Insurance companies tailor insurance coverages to their clients’ needs, and you can take advantage of this.

Does your home insurance have any coverage for your pets? What about young children or parents who live in a nursing home? How often do you travel?

Some policies cover possessions that are damaged or stolen off-premises, which can save you a lot.

  1. Improve Your Credit Score First

Your credit score will undoubtedly impact how much home buyers insurance you get. You might have to pay higher premiums if you have a low credit score, so improving it prior to getting an insurance policy may help. Besides, having a good credit score will get you better loan terms and mortgage rates.

Paying off existing debts is an excellent way to improve your credit score. Developing a good repayment history is the next best thing. This will take time, so it’s best you start as soon as possible before getting a new home insurance.

Ready to Protect Your Home?

Homeowners insurance is a significant part of your new home because it plays an important role in protecting it in the future. Ensure you understand everything before making your decision. Get in touch with us, and we’ll be glad to help you make the right choice.