Homeowners Insurance Basics For First Time Buyers

Homeowners Insurance Basics For First Time Buyers

Buying homeowners insurance can be a daunting and tedious task. However, it’s one of the most important expenses you’ll ever have to cover in your adult life. It’s important to know how much insurance you actually need, and what coverage your policy should include. In this article, we talk about these details plus the advantages of having homeowners insurance.

Benefits Of Having Homeowners Insurance

Being a homeowner is a huge responsibility that comes with many expenses. These often include regular mortgage payments, which can be a hefty sum for most households. 

If you’re a first-time homeowner, you might be tempted to just do away with insurance altogether to save on costs. While this is completely understandable, skipping homeowners coverage can be one of the riskiest things you can do, exposing yourself and your family to heavy financial burdens should something untoward happen to your home.

Even when you’re as diligent as homeowners come in terms of taking care of your house and improving its features, you can’t control for accidents that could significantly damage your home. Such unforeseen events include natural disasters, severe weather, fires, and floods. If you live in a neighborhood with a higher than average crime rate, you may also worry about potential breaking and entering.

Having homeowners insurance will help you recover your losses in the event of such unfortunate circumstances. It will also help you pay for any necessary repairs following structural damage to your home. This can save you the stress of having to pay for everything out of pocket.

Furthermore, having your own home is one of the most important assets you can have. Once you pay off mortgages, being a homeowner frees you and your family from the financial burden of renting, helping you secure a more sustainable financial future. Having adequate insurance will help you protect such an important asset to your long-term financial independence.

What Should Your Insurance Package Cover

Homeowners Insurance packages will vary between different insurance providers. Insurers tend to include all sorts of extra coverage in an insurance plan. While such extras may prove useful to you, it would be a good idea to familiarize yourself first with essential coverage that every homeowner should be covered for. At a minimum, your policy should cover you for the following items:

1.    Structure of the home – This coverage will help you pay for physical damages to the house itself.

2.    Additional structures – Aside from your main house, your property may include other structures like pools, pool houses, gazebos, driveways, and fencing. This coverage will help you pay for damage to these structures.

3.    Personal Property – This coverage helps you pay for damages to the contents of your home. This is particularly valuable if you keep expensive items like jewelry, art, and antiques.

4.    Additional Living Expenses – If your home is subject to significant structural damage, you may need to stay somewhere else while your house is being repaired. This coverage will reimburse you for additional expenses you incur in securing another place to stay temporarily.

5.    Liability – This coverage helps you settle liabilities should you inadvertently cause damage to someone else’s home and property.

Determining How Much Coverage You Need

To remain competitive, an insurance agent may try to upsell and offer you more coverage than necessary. If your budget doesn’t allow for much wiggle room, it’s important to know which coverage you should invest in more, and which ones you can afford to save on. You can do this by assessing your needs based on the following factors:

1.    Your home’s estimated cost – The amount of insurance you sign up for should be able to pay for the cost of potentially rebuilding your home.

2.    Risks related to your geographical location – Is your local area prone to earthquakes or severe weather events? How high is the crime rate in your neighborhood? The level of such risks should be reflected by your insurance policy.

If you need guidance in buying homeowners insurance, Contact Panorama, we have a great team of financial advisers who are ready to help.

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