Congratulations, you have just purchased the home of your dreams! Before you sign the dotted line and move in, you will need homeowner’s insurance, of course.
While pricing out different insurance agencies, make sure you know the questions to ask so that your policy protects you. The goal is to find the best annual price with the best coverage for your needs. You don’t want to be over or under coveraged.
Here are key questions you should ask your potential insurance agent:
1. New Home VS Existing Home Insurance
Some good news: Insurance coverage on a newly built home is less than an older existing home. The newer the home, the less it costs to insure – even if the new build is much larger! In fact: savings can be up to 45 percent from a new vs. 10 year old home. If the home is in process of being built on land that you own, talk with your broker to make sure you are covered for vandalism or theft, building materials, the structure of the building, etc. This should be covered under a temporary Builder’s Policy. While your builder should have Liability insurance, you want your homeowner’s policy to cover personal property/liability, etc during the building process.
2. What Does A Standard Policy Cover?
A standard policy should cover four areas: Dwelling for your home’s physical structure; Liability for physical injury of someone who is on your property; Personal for items inside the home (Television, golf clubs, appliances, furniture, for example) and Additional Expense Coverage if you’re displaced because of storm damage, a fire, etc. (hotel costs, transportation, etc).
3. How much coverage do I need?
Make certain you’re purchasing the best amount of coverage. You don’t want more coverage than you need. However if you have too little, you might not have enough coverage and have to pay big in an emergency.
The first level of a plan is Actual Cash Value, covering the value of your home and its contents. The next level is Replacement Cost, covering cash value of your home (without depreciation).
If you’re buying a home that you will reside in for many years, and if there is a storm or fire, you might want to rebuild your home to its original value — meaning your replacement cost coverage cost will be higher.
4. What about my deductible? How high is too high?
If you set a higher deductible, your annual premiums are lower. The savings is great, but it could mean spending more upfront on repairs if there is damage.
5. Does the type of pet I have impact my rates?
In some cities, counties and states, your companion animal can impact insurance. For example, larger breeds have physical capacity to cause more damage and in some places it means you need more coverage.
6. Do I need flood insurance or other water damage coverage?
It depends where you live. If you live in an area with hurricanes, yes, you need flood insurance. Living near lakes could mean you need a separate flood insurance policy, too. Flood insurance is rarely included with a standard home insurance policy. You usually have to purchase it seperate. Tornadoes are usually covered in a standard policy (but always double check). Hurricanes and floods are not. Also, your vehicle may need separate coverage for a tornado or flood.
7. What about Hazard insurance?
Flood insurance is not hazard insurance. “Hazard” refers to fire damage, theft, or damage from other natural disasters. The price of Hazard insurance depends where you live.
8. If I have a detached garage is it included in my coverage?
Some policies charge differently, make sure to ask your agent if you need a rider for a detached garage/structure.
9. Do I need a rider for my luxury items, such as my wedding ring or fine art?
Standard coverage for very valuable jewelry and other high ticket items have cut off points, so you may need to add a rider to include them. Discus with your provider.
10. What if my neighbor’s tree falls on my house?
Usually, your home owner’s insurance will pay if a neighbor’s tree falls on your house. If your tree falls on their house, their insurance policy pays.
11. How much personal liability protection do I need?
Personal liability protection keeps you covered if there is an injury on your property. Usually, liability protection is included in the policy at an average of $100,000 worth of liability insurance. It can be raised if you want more coverage.
12. What is a policy limit?
A limit is the maximum amount of money your provider will pay for a claim. Dwelling is usually the cost of the whole home. Personal property converge is usually 50 percent of the dwelling limit. Ask your agent for specifics. The rest of your policy limits are typically related to the cost of the dwelling. Personal property coverage is often 50 percent of the dwelling coverage limit.