Buying your first house can be a pretty stressful experience. Making such a large purchase is an exciting step into adulthood, but taking on the debt and responsibility of home ownership can come with a lot of emotional pressure, especially if, like most first time buyers, you have to settle for a house that is not exactly fresh off the assembly line. But there is a way to lift some of the burden off your shoulders and secure your property and its contents against unlikely (but not unforeseen) damage from natural disasters, fire, and even theft. By purchasing home insurance you can rest easy, knowing that your investment is safe from loss (along with your other assets); but you need to find the right company and the right plan. Here are just a few things to consider before you jump into a policy.
- Shop companies. Before you even start looking at homes, you should be scouting insurance companies. Once you find the home of your dreams, you’re going to need to secure an insurance policy in order to buy it; most lenders won’t advance you the funds for such a large purchase without some guarantee that they’re going to be paid should it burn to the ground, for example. So you need to at least narrow down the list to a few insurers that you’re interested in. It’s just good preparation.
- Make a checklist. In order to get home insurance quotes from various companies, you’re going to have to come prepared with certain information (otherwise how can they give you an accurate quote?). So when you start looking at homes, think about jotting down some of the following information to provide to potential insurers: year built, square footage, location, age and type of roof, plumbing, and electrical, and number (if any) of insurance claims filed in the past. If this information isn’t listed in any paperwork, simply ask the realtor. A full assessment of the property will come before you sign the paperwork, but any of these things could make a difference in the cost of your policy (and your desire to purchase the home).
- Understand options for payment. Like most types of insurance (you may be familiar with automobile), there are many options that could change the price of your policy. The type of insurance you select (coverage) along with the deductible you choose can have a dramatic effect on your monthly payments.
- Types of insurance. While you’re paying off the bank loan you will likely have to opt for a fairly bulky insurance policy that will likely include both property (should damage come to your home/land) and liability (should others be injured on the premises). You may also need to obtain additional coverage for natural disasters common to your area (such as fire, flooding, earthquake, and so on, although some companies may include these in the blanket policy). You should ask them to spell out not only what is covered, but what you could include if you expanded the policy (so you know what isn’t covered).
- Ask about discounts. Most companies offer reduced rates for homes that have an alarm system while some will give rebates if the home is near a fire station, you are over a certain age (say, 50), or you hold multiple policies. There may be other potential discounts, as well, but you’ll never know unless you ask.