Buying a new home is exciting. And it’s likely to be the largest investment you make during the course of your life. Protecting this valuable asset is vital and, as a responsible homeowner, getting homeowners insurance is a wise step. If you’re wondering when to get homeowners insurance when buying a home, you can find your answer here.
But you may be asking why you need homeowners insurance in the first place.
Imagine having to dip into your personal savings because a pipe burst during the second week after moving into your new home. Or your friend was so distracted by the stunning skylights in your new house, she tripped over the rug and broke her ankle. She sends you her medical bills as she doesn’t have health insurance.
A homeowners insurance policy has you covered for these unexpected (and unbudgeted) scenarios. A standard policy protects you against flooding or fire damage. Theft of personal belongings and other household contents will also be paid for. And, yes, your friend’s medical bills will be covered. too.
It makes sense to have homeowners insurance, and there are many things new homeowners need to know about insurance. Find out when the right time is to take out a policy and how to get one when buying a house.
Is Homeowners Insurance Compulsory?
You’re not required by law to take out homeowners insurance when buying a home. However, if you’re looking for financing to purchase your dream home, you will need homeowners insurance. A mortgage lender wants to know their investment is protected. So before approaching a mortgage company for a loan, get your homeowners insurance finalized.
The policy gives the lender peace of mind when they’re investing in your home. Make sure it’ll cover your home if any repairs are needed due to damage from snowstorms, hurricanes or any other unexpected disaster. Roofs don’t fix themselves, you know!
What Kind Of Coverage Should You Look For In Homeowners Insurance?
While you can opt to have additional coverage, a standard homeowners insurance policy will have your back in many unexpected eventualities.
Any damage related to a covered event will be paid for when your house and its outbuildings need to be repaired or rebuilt.
Loss or damage to your possessions, be it the dining table or your television, will be covered.
If your house needs to be rebuilt, your policy will pay for temporary accommodation in a hotel or guest house.
Lawsuits And Medical Claims
Your homeowners insurance will cover you if a guest falls and injures themselves on your property in the event they hold you liable.
If you’re in a high-risk area for earthquakes and floods, you’ll need to add this coverage to your standard policy. Extra coverage is beneficial if you own valuables such as an antique piano or grandmother’s diamond necklace.
If you’re buying a house for the purpose of renting it out, consider expenses cropping up when having a tenant in the house. Some policies have been specifically designed for landlords.
The same applies to condo owners. If you’re buying a condominium, your coverage needs could be different. Find out which home insurance companies offer coverage for landlords and condo owners so you get the best policy.
Homeowners can consider adding additional coverage to cover expenses associated with identity theft and credit card theft or loss.
When Do I Need Home Insurance When Buying A House?
As soon as you’ve signed a contract on your new home, you need to go shopping for homeowners insurance. This will give you enough time to research the different insurance companies and to review the different homeowners insurance policies available.
Do you get homeowners insurance before closing on your new home? Yes! Typically, you’ll have up to a month between signing the contract and closing on your new home. Having your homeowners insurance in place before closing is important. You’ll need to prove your first year’s premiums have been paid on the day you close on your new home.
So before finalizing your homeowners insurance, consider the following questions:
- How much coverage do you need when getting homeowners insurance?
- How do you get homeowners insurance when buying your home?
1. How Much Coverage Do I Need?
If you’re dealing with a reputable insurance company they’ll help you calculate how much homeowners insurance you need. Many factors are used to help determine adequate coverage.
The value of your home and the area you’re buying needs to be calculated to factor in the costs of rebuilding your home.
Calculate the estimated replacement value of all your personal belongings. A standard policy will cover anywhere between 50% and 70% of the value of your personal belongings. If this is not sufficient, it may be worthwhile paying for extra coverage.
Home insurance companies recommend homeowners cover themselves up to $500,000 when estimating costs due to a guest’s medical claims or legal bills. Personal liability claims can get very expensive!
Much like the life insurance companies of today, most home insurance companies offer an online facility to get quotes. Make use of this facility and get as many quotes as you can. Compare them and remember to note any specific exclusions or additions.
2. How To Get Homeowners Insurance When Buying A Home
Once you’ve narrowed down your search by getting different quotes, you can start approaching home insurance companies for further information and advice. By the way, if you prefer to go through a broker, it’s an option to consider.
It’s important to find out how an insurance company deals with claims. Customer reviews (and insurance company reviews) can give an indication of how satisfactory the claims process is for a company.
Check out deals on packages or special discounts. Some companies have reduced rates for new homebuyers. Other benefits could include no-claim premium benefits, longtime customer benefits, and reduced rates depending on the area you’re buying into.
Customizable homeowners insurance policies give you the option of creating a policy specific to your own coverage needs.
Going through a broker has many advantages. They’re professionals who have a full grasp and understanding of how homeowners (and other) insurance policies work. They know which are the best companies to work with and are able to compare multiple policies.
Whichever route you choose to get homeowners insurance when buying a house, the responsibility lies in your hands. Both the insurance agent and broker will be asking you to supply information and necessary documents in order to successfully complete your homeowners insurance policy.
If you’ve an existing policy in place, remember to cancel it before taking out a new homeowners insurance.
The Benefits Of Homeowners Insurance
Buying a new home is expensive business! The thought of spending more money on homeowners insurance could have you wondering if it’s really a necessary expense. If you still need convincing to get homeowners insurance when buying a house, consider the following scenarios.
Unexpected Repairs And Replacement Costs
We all have good intentions when it comes to saving money for household repairs or replacement of broken appliances. But somehow it never happens. So when your child smacks their baseball through the massive lounge window, your heart sinks.
Not only do you need to find the right glass and repairman to do the job, but you’ll be dipping into your personal savings to cover the costs. Not only will a homeowners insurance policy cover these expenses, the insurance can also help you find the right person to do the job, professionally and quickly.
You’ve moved into a new state and were not aware of the thunderstorms common to the area. One evening, lightning strikes a bit too close to your home and hits one of your outbuildings, causing it to burn down.
Rebuilding is expensive and you may end up asking for a loan, putting more financial burden on yourself. Homeowners insurance will cover these expenses for you at the minimal cost of monthly premium rates.
Costly Medical Claims
Remember the friend who tripped and broke her ankle because she was eyeing your stunning skylights? Well, it wasn’t just her ankle she fractured. She injured her shoulder and is needing surgery. Just because she’s your friend doesn’t stop her from holding you liable for her medical bills.
It happens more than you might like to believe. Save yourself sleepless nights knowing your homeowners insurance will cover all the bills.
Home Invasions By Burglars
Replacing items such as televisions, computers, home sound systems, and even your fridge (yes, they do get stolen) can leave a big dent in your savings. When you least expect it, your home could be invaded by thieves. Returning home from a night out and finding your property has been broken into is a disturbing thought. Discovering all your electronics and your grandma’s diamond necklace missing will leave you feeling depressed. Coverage of these items in your homeowners insurance means you’re taken care of.
Being a new homeowner comes with responsibilities. If it’s your first time, you may still be discovering what these responsibilities entail. It’s very easy to get caught up in all the excitement of buying your new home and homeowners insurance could be forgotten.
Getting homeowners insurance when buying a home should be on your “to do” list once you’ve signed the contract. While it may seem intimidating, especially if it’s your first time buying insurance, it needn’t stop you from getting coverage. It’ll end up being one of the best decisions you’ve made when buying a home.