Selecting Homeowner’s Insurance

One of the many things you will have to think about while you are in the process of buying a new home is the insurance you will need to protect it.  Homeowner’s insurance is more than just a good idea—it is required by your lender as part of your mortgage contract.  You will not be able to close escrow on your home if you do not have an appropriate homeowner’s policy in place.

Homeowner’s insurance protects your home against multiple possible risks, from fire to burglary.  A comprehensive homeowner’s insurance policy will provide coverage for your home as well as everything inside it.  You will need to make sure you have the right level of coverage for your needs.

Where To Find An Agent

A good place to start shopping for homeowner’s insurance is with your current insurance agent.  There is likely to be a discount if you insure both your home and your car with the same company, so it is well worth considering the company that insures your car.  If your car insurance company does not handle homeowner’s insurance policies, you can instead ask for referrals from your REALTOR® or your mortgage broker.

The Coverage You Need

A good homeowner’s insurance policy provides enough coverage to rebuild your home from the ground up if necessary, as well as coverage for all of the property inside your home.  You should not confuse the replacement cost of your home with the market value; these are two different things, as market value includes the value of the land.  Insurance does not cover your land, only the structures on it and the contents of those structures.  You insurance company will use the appraisal of your home to determine all of the structural factors that go into determining replacement cost.

The contents coverage is usually a percentage of the replacement cost of the home.  You should be aware that certain high value items such as jewelry may require a special coverage called a “floater” added onto the policy in order to cover them for their full value, as there are usually limits on such items in the standard policy.  Be prepared to provide an appraisal on high value items.

A good insurance agent can guide you through the process of selecting the right homeowner’s insurance policy for your needs and ensuring your new home is protected properly.  Finding someone you can trust is important—after all, this is the biggest purchase you will ever make!