Homeowners insurance considerations when buying a house
Most homeowners do their research before buying insurance, but that doesn’t mean they’re covered for all contingencies. Even the most conscientious consumers can get fixated on getting the best deal and may overlook things they assume are covered or they’re convinced they’ll never need.
The biggest mistake many consumers make is to focus only on price, says Bill Wilson, associate vice-president for education and research for Independent Insurance Agents and Brokers of America. “All homeowners policies are not the same,” he warns. “So they need to work with an agent and determine what their unique exposures are and which of the policies that are available are best for them.”
Top 5 home insurance tips
- Get enough home insurance coverage. While it sounds simple, make sure you have enough coverage to completely rebuild your home (or ensure you have the deposit for a new rental), replace your personal belongings and protect yourself in case someone is injured on your property and sues you.
- Consider the amount of the deductible. Generally speaking, the higher the deductible the lower the premium.
- Ask about available discounts. A number of home insurance discounts may be available for things like installing smoke detectors and wind-resistant shutters and insuring your home and auto with the same agent. Your agent can give you the details on how to save on your property insurance premiums.
- Customize your policy. There are certain hazards that your regular home insurance policy doesn’t cover. However, you can add specific coverages for an additional cost. For instance, while flood damage is not generally covered, if you live in a flood zone, you can purchase flood insurance through the Federal Emergency Management Agency (FEMA).
- Talk with your insurance agent to make sure you've accounted for everything you want to cover. Keep a list of your valuables and consider taking pictures. It'll help speed up the process of getting your things replaced
Think about replacement cost
It’s important to make sure the house is covered for proper amount, he stresses. “Whatever you paid for it has nothing to do with how much you insure it for,” Wilson says. “It’s what it would cost to rebuild that home if it burned down or if a tornado destroyed it.” If you got a great deal on your home and have done some remodeling, the replacement cost may be a lot higher than what you paid for it, he explained.
Paul Coultrap, insurance producer for TW Group, emphasizes the need for an individualized approach. “To me the most important thing is finding the right agent who’s going to help the homeowner out,” he says. This means discussing the details of the house and all of the relevant contents to determine the needed coverage. “I can save you $500 on a policy,” Coutrap says, “but if at claim time you don’t have the coverage (needed), what good has it done?”
In addition to discussing the house itself, it means considering the valuables within, ensuring these are appraised and accounted for. “If you have the 1952 Tops Mickey Mantle rookie card and you don’t tell your agent about it and it’s destroyed in the fire, you’re not going to get the $300,000 it’s worth,” Coultrap says.
Every few years, it’s important to sit down and make sure that anything new is likewise covered. For example, people might have added a screened-in back porch or a deck, which now needs to be included for the replacement costs.
Consider additional homeowners insurance coverage
Homeowners often believe they are covered for serious issues when they are not covered. “A lot of times earthquake coverage needs to be added to the policy,” Coultrap says. “Also, flood insurance is not included in any homeowners’ policy and you need to make sure that it’s a separate policy. We’re finding with these freakish storms these days that more and more people who are not necessarily in the flood zone still get a flood.”
It’s also important to add coverage for backup from a sewer. If such water seeps into a finished basement, it can ruin all of the drywall, Wilson notes.
“It doesn’t need to be a basement either,” Wilson says. “Some houses on a slab might have a drain that water can come up through.”
Cases in which storm sewers back up are relatively common, Wilson stresses. “Tree roots in a sewer line happen all the time,” he says, adding that coverage for this can be pretty inexpensive.
Avoiding these insurance mistakes now will benefit homeowners in the future. For more information on homeowner’s insurance, visit the Homeowners insurance resource section or get an online quote today.
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