5 Insurance Tips for First-Time Home Buyers
Buying your very first home is one of life’s most exciting adventures. But the whirlwind of mortgage approvals, closing costs, escrows, and property taxes, all of which are crucial to obtaining your new home, can make your head spin.
Once you’ve found that perfect starter home in charming Menlo Park or another Silicon Valley community, an additional important piece of the home ownership puzzle is insurance. Though you may have had renter’s insurance, a homeowner’s policy has significantly more facets to consider. Understanding the on-going cost and the coverage you’ll need is often uncharted territory for first-time buyers.
Here are 5 tips to help you obtain the right insurance to fit your new home’s needs.
1. Credit Counts
Your credit score helped you obtain your mortgage rate and it can also affect your homeowner’s insurance. Providers take your credit into account as part of the formula they use to assess your risk as a potential policyholder. Statistically, those with good credit are considerably less likely to file insurance claims.
If you haven’t already done so, it is a worthwhile endeavor to examination your credit reports from all three major credit companies. Take the necessary steps to remove items that are incorrect, or do what you can to bump up your score. It will save you money both on your mortgage interest rate as well as your insurance premium.
2. Evaluate Along The Way
While looking for a home, keep potential risks in mind. Is the house located in a high-risk area, making it vulnerable to natural disasters such as mudslides, flooding, or wildfires? How far away is the nearest fire hydrant? Does the home have a swimming pool? Each of these can raise the amount you’ll pay for insurance. These risk factors may not deter you from buying your dream home, but at least you’ll be aware of possible issues.
3.Get A Number of Quotes
Just like with automobile insurance, the cost varies dramatically depending upon the provider. This is because each carrier uses a unique formula to determine premium costs. It is worth shopping around as you could end up saving hundreds of dollars for the exact same coverage.
4. Get The Right Amount of Coverage
While you don’t want to pay more than you have to for insurance, it is vital that you obtain the proper coverage. Most home insurance policies provide protection from a number of risks, including liability, fire, and some weather-related hazards. Other things to consider are whether you have any high value personal items that require extra coverage (artwork, jewelery, etc.). If your new home is located in a zone that is affected by flooding or earthquakes, odds are you will need coverage above and beyond your normal policy.
One item to be aware of is the amount of your dwelling coverage, the section of the policy that protects the physical structure of your home if it is damaged by something covered by your insurance. Be sure you have adequate coverage to rebuild your home should it be destroyed. The rebuild amount is generally significantly different than what you paid for your home. To help you determine the proper dwelling coverage, use an online coverage calculator.
5. Bundle Up
You can save up to 20% by purchasing your automobile, homeowners, and other insurance with one company. If you have other policies with a different company, it pays to inquire about a bundle.
With these five homeowners insurance facts, you’re new home will be properly insured.