Finding the Right Insurance for Home

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Jul 14, 2021 Homebuyer blog

Aside from planning how to buy a house for the first time, you should also consider the kind of insurance you need. One thing that homeowners learn is that homeowners’ insurance is a necessity. It’s a crucial investment as it protects your home and personal possessions from theft and damages.

Banks and other online mortgage lenders need the property insured for its full value. You can’t get a loan or home financing without showing you’re covered.

Finding the right insurance for home buyers is not easy. Literature on loan definitions can be overwhelming. It’s also confusing to talk about coverage, exclusions, and terms and conditions. But it’s something you must do if you want to keep your property. Insurance will also ensure that you’ll have the means to rebuild if the worst happens.

Here are some things to consider when finding the right insurance for home:

Learn the Different Types of Home Insurance | Reach Home Loans

Learn the Different Types of Home Insurance

You must first understand the two different categories of home insurance. These are buildings insurance and contents insurance.

Buildings Insurance covers any destruction or damage done to your homes. The policy covers the structure and any of its permanent fittings and fixtures (ex. bathroom, kitchen units).

Contents Insurance covers the cost of repairs of movable possessions inside the home. It also covers the replacement of items stolen, destroyed, or damaged.

You’ll need building insurance when you buy a house. You can’t get your mortgage without it. You should still invest in this insurance even if you already own the property as it will protect your investment.

While contents insurance isn’t required, get one to protect your belongings. It will be a load off your shoulders if your home gets flooded or robbed.

You should also know what scenarios your insurer won’t cover. Specific events, like natural disasters, war, or “acts of God,” are not covered. The most that you can do is to add riders to your policy. For instance, you can ask for flood or earthquake insurance if you live in areas prone to these disasters.

Look Beyond the Premiums

You must always look beyond the annual premiums when applying for a loan. You should also do this when finding the right insurance for home. Make sure you consider other factors, like excesses and the policy’s wording. Experts say some of the lower premiums come with high policy excesses. Certain covers are only included for an extra payment.

Mortgage Insurance Premium | Reach Home Loans

Strive for an Accurate Accounting

You don’t want your home to be under-insured since this will cost you more if you do have to file a claim. You can avoid this by choosing a policy that has a blanket sum for both buildings and contents insurance.

The computation for the premium depends on the average rebuilding cost in your area. Sometimes it’s based on the house’s number of bedrooms.

You can also use a rebuild cost calculator to compute the right coverage for your home. There are several good ones you can find online.

An inventory list of your home and possessions will also help. You need it to compute for the proper coverage. Make sure you include details like serial numbers. Add the item’s price when you bought it and its current value. You need to know how much is the replacement.

Accept That Some Properties Need Special Coverage

If you have a high-value property, it makes sense to ask for more coverage. Yet buildings and contents insurance might not be enough. Consider other types of policies geared for properties with mid to high-net-worth.

These policies place valuables like artwork, gold, and silver in distinct categories. Unlike standard home insurance, these policies show the total insured amount. They also have higher sole article limits.

This type of home insurance will cover your possessions wherever they are in the world. They are also free from warranties, and there’s no penalty if you’re robbed. This remains true even if you forgot to set the alarm.

The insurance provider might also include coverage like a home emergency. They could also provide policies for legal expenses, a holiday, or a second home. The insurer will also allow top-value building works. But this will depend on specific terms and conditions agreed upon by all parties.

Home Insurance Coverage | Reach Home Loans

Don’t Be Afraid to Get Extra Coverage

Some insurance companies offer different additions while finding the right insurance for home. These are tacked onto your buildings and contents insurance policy for an extra fee.

Don’t be afraid to ask for extra coverage. For instance, you should consider Accidental Damage, Home Emergency, or Excess Protection.

You should consider getting a policy that covers the contents of your garage or shed. You can also have the valuables that travel with you insured. Coverage for contents in garages varies, so consider what you have in them and check that the insurer will give you enough protection.

Insuring this aspect of your property can be a useful add-on if you own expensive bicycles. You want to specify their value. Otherwise, the insurer will include it under the unspecified possession section.

The same goes for your possessions like watches, jewelry, and mobile devices. These might have higher value, but they are not covered under a content policy. Think about getting an add-on that will protect these items.

Did you find this article informative? Then you’ll like reading this post on whether you should make a small or big down payment on your home.

Before You Go Searching

Whether you’re buying your first home or looking to refinance, Reach Home Loans has you covered. We are one of Florida’s best mortgage lenders and have helped thousands of homeowners for 15 years. We offer conventional, VA, FHA loans, and more. Call us at 954-703-1465 for a free consultation.

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