A Guide for First-Time Buyers: 3 Facts to Know When Buying Home Insurance

A Guide for First-Time Buyers: 3 Facts to Know When Buying Home Insurance

Buying home insurance is an important part of the process of becoming a responsible homeowner.

And the majority of homeowners have taken the necessary steps to secure their property and belongings in case of future disaster.

But if you’ve never purchased home owner’s insurance before, you might not be aware of all the things you should take into consideration.

These 3 tips will help you make the right choice when buying the best policy for your needs:

Compare Companies Before Buying Home Insurance

With some mortgage lenders, you might be required to have some form of homeowners insurance.

What isn’t required, however, is purchasing it from a particular company. This gives you the opportunity to shop around and compare coverage, prices, and customer reviews before you make your decision.

Before you sign a home insurance contract, make sure you’re signing up for the right type of coverage as well as the right amount of coverage.

And don’t just go for the coverage option with the lowest price. Instead, when buying home insurance, look for the policy that offers the best home insurance value for your budget as well as your needs.

Should disaster strike, the insurance company you’ve chosen will be the one you deal with.

Looking into the customer service before signing up is important as well. See what other customers have had to say about their experience with the company in question.

Consider Replacement Cost or Cash Value

As the homeowner, you’ll decide whether you want to insure your home and your belongings for their replacement cost or for cash value.

Replacement cost is the amount it would require to rebuild your home or repair any damages with similar materials without deducting anything for depreciation. If you do decide to go this route, you should insure your home for no less than 80% of its overall replacement value.

Cash value is the amount of money it would take to replace or repair any home damage after depreciation.

A policy with coverage based on cash value is likely going to be the least expensive option out of the two. Keep in mind that the coverage for your belongings will likely decrease over time.

Re-Evaluate Your Home Insurance Needs Yearly

After you’ve gone through the process of buying home insurance and signed a policy, you should still plan on meeting with your insurance agent yearly to make sure your policy is still providing adequate coverage as your needs change.

If you do any remodeling or renovations to your home, add a new room, or add value to your property in any significant way, a change in your policy is a good idea.

Learn Other Helpful Tips for Homeowners

Once you’ve bought and gone through the process of buying home insurance, there are always more efforts you can make toward making the most of your property and enjoying your new home.

Find lots of helpful tips on our blog for decorating, renovating, decluttering and more.

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