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Home Insurance Basics

August 27, 2021

Home Insurance Coverage Basics for First-time Homebuyers

Buying a new home is a significant and exciting milestone, but it does come with its fair share of challenges and plenty of important considerations. And at the top of the list is finding good homeowners insurance.

The right home insurance policy will provide you with sufficient coverage in case of property damage and protect you against liability risks and legal claims.

Your New Home Will Need Home Insurance

Anybody who takes out a mortgage to purchase a house will need home insurance. To ensure that the property is protected against calamities, damage, or peril, banks and mortgage companies require homebuyers to present a homeowners policy at the time of closing; otherwise, they will force place insurance with a provider of their choice.

On the other hand, if you paid for your home in cash, you may choose NOT to purchase home insurance. Even if this is the case for you, though, not having a homeowners policy is a very poor financial decision. Considering that your home is probably the largest and most important investment you’ll make in your lifetime, it only makes sense to protect it by any means necessary.

What Does Homeowners Insurance Cover?

Home insurance is an essential part of homeownership, but not all policies are created equal. As a first-time homebuyer, it’s critical for you to understand the basics of home insurance, so you end up with a policy that meets your coverage needs and requirements.

A standard home insurance coverage typically includes:

1. A dwelling coverage that pays to rebuild your home in case it gets damaged by a covered peril.

2. A personal belongings coverage that compensates you or pays for the replacement of lost/damaged insured personal belongings, as long as the cause of loss/damage is covered by the policy.

3. A liability insurance coverage that pays for:

● damages your household members cause to other’s property;
● medical expenses of people who got hurt/injured while in your property;
● legal defense in case you get sued over a 3rd-party injury or property damage.

4. An additional living expenses coverage that will cover your accommodation, meals, and other costs of living should your house become unlivable because of an event covered by your policy.

What’s Not Included in Your Home Insurance Coverage?

Homeowners insurance covers many types of damages, including those caused by fire, lightning strikes, hail, windstorms, weight of snow and ice, theft, and vandalism. However, policies usually exclude flood damages and damages caused by movement of the earth (earthquakes, sinkholes, and mud flow) to their coverage.

Also, luxury items such as high-priced jewelry and art collections are only covered up to a certain amount.

If you live in an earthquake-prone or flood-prone area, you may consider purchasing a separate insurance for these perils. Similarly, you can also opt to purchase additional or supplemental coverage for your valuable possessions.

Buying Home Insurance for the First Time

Purchasing a home insurance policy can be confusing and stressful, especially when you’re doing it for the first time. As you learn more about it and familiarize yourself with the process, though, you’ll begin to realize that you have more control over the situation than you think.

Informed buyers make better decisions. Knowing what to look for and how to compare your options will help you find a policy that provides you excellent value for your money.

If you think you need more help and guidance in choosing a home insurance policy, speak with an insurance adviser or independent agent. Industry professionals can help shed light on any questions you may have about homeowners insurance and make experienced policy recommendations based on your individual needs.

About the Author:
Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.
https://www.bennettandporter.com/