Everything you need to know to have your new home fully covered
Many people spend months and even years looking for a home to buy, and put aside the home insurance decision that would help protect their investment until just before the closing of the purchase.
Don’t.
Home insurance policies may have certain common inclusions, but they are not something generic. The moment you realize you’re not covered — or not enough — isn’t after a fire or theft or other kind of inconvenient (and expensive) experience.
You should contact several agents, says David Thompson, an instructor with the Florida Association of Insurance Agents in Tallahassee. Thompson (who was a longtime agent, before he was an insurance market educator), pointed out that the biggest mistake consumers make is buying home insurance just because it has the lowest annual premium.
“If a company tells you that ‘insurance is insurance,’ it’s not,” he said. I can go to the supermarket and see five brands of milk I can buy,” she said. “For me, skim milk is skim milk. But for insurance, it’s not like that.”
Some considerations about insuring your home:
Know what’s covered.
If your home and its contents were damaged or destroyed, your policy would generally cover a “replacement cost” — an estimate of how much it would cost to replace or rebuild the home and replace your belongings.
“It has nothing to do with the purchase price or the valuation of the value or the appraisal of the cadastral value,” Thompson says. “It’s about what it would cost to rebuild today.”
The replacement cost is often calculated through insurance company formulas, and they have several ways to arrive at those formulas, he says. The owner will provide basic information (bathrooms, bedrooms, etc.) and insurers will add other current cost information.
In addition to the structure and its contents, insurance usually offers a certain amount for liability protection against third parties, if for example someone is injured by a slip and subsequent fall inside your house; It would also cover daily expenses if you are unable to live in your home due to a fire, etc. Common policies usually list the different calamities that are covered, such as fire, theft, hail, lightning, etc.
You need to know what’s not covered.
Often policies do not cover damage from floods, sewer overflows, earthquakes and some other unfortunate circumstances. You may want to get separate coverage for such circumstances, particularly if you live in a flood or seismic area; Your mortgage lender might insist on this.
Hurricanes represent a special category, and the deductible (the amount the insured pays for extra expenses before coverage takes effect) is often not a set amount (more on this later); It’s usually based on a percentage of the insured value, up to 5 percent — so after a catastrophic storm, the owner is liable for a hefty amount.
If you are planning to operate a business from home, your equipment for that purpose would probably not be covered.
When covering your belongings, insurers suggest that what you should do is take inventory of what you have, and update it regularly. In addition, common policies are limited in the amounts to be paid for the contents, so if you have particularly valuable items such as furs, jewelry, antiques, etc., you may want to buy separate coverage for the full value of those items.
Certain factors particular to your home can affect the cost of your policy.
The National Association of Insurance Commissioners says the biggest issues lie in the type of construction (wooden houses often cost more to insure than brick houses) and your local fire protection — this can include the distance the house is from a fire hydrant, the quality of the local fire department and the distance it has from the home.
The association also said newly built homes may qualify for discounts because the new materials are supposed to be more resilient.
“There have been great advances in roof shingles, wind speeds that glass can tolerate and other building code advances” that new construction can benefit from, said Michael Barry, vice president of press relations for the Insurance Information Institute, a nonprofit education service funded by the insurance industry.
Other things that may affect your coverage: Certain insurers will not cover owners with certain dog breeds as pets, due to high levels of bites; Its price can be affected by having an oven or wood stove (fires) or by having a pool or trampoline that could result in certain responsibilities, according to the Insurance Inspection Group.
But there are discounts too. An insurer may pass you a better price if the residence has smoke detectors, a burglar alarm, a fire extinguisher system, deadbolts or window security devices, according to insurance inspectors. You could get a discount if you package home risk insurance with your auto or other coverage.
Consider the deductible.
Policies typically have a “deductible” amount, meaning that if a loss occurs, it is a sum that the policyholder would pay before insurance coverage takes effect. Often, the deductible is $500 or $1,000, but it can vary. Basically, the higher the deductible amount, the lower the premiums.
Certain policies may have a “deductible percentage.” If your home is $100,000 insured and you have a 2 percent deductible, then $2,000 will be deducted from your claim amount if the losses are total, according to III.
Buying a condo?
In addition to your personal coverage, you must ensure that the coverage of the condominium association for the common areas of the building and the issues arising from the responsibilities are up to date.
Either way, expect a potential insurer (a respectable one) to ask a lot of questions, Thompson said.
“A good agent uses a checklist and asks a lot of questions,” he said. And there should be no surprises, he added. There are a number of sample checklists on the internet to let the owner know what to expect.
Finally, don’t buy insurance and presume that the coverage you need today will be the same as you need in a few years. House values change, and your acquisition of belongings over time might amaze you. Cover.