If you’re buying a home for the first time, we know how overwhelming it can be to go through the experience. There are a lot of things to consider and some may slip through the cracks entirely. One of the things that you need to remember, however, is purchasing homeowner’s insurance. This is one of the most important parts of the home-buying process. If something should happen to your home and you don’t have it, it can be ruinous. But before you sign up for insurance, there are a few things you should know as you’re shopping around.
Compare Coverage from at Least 3 Companies
Your mortgage lender will probably require you to purchase homeowner’s insurance and may dictate other insurance you may need to have such as flood insurance. But they won’t require you to buy from any particular company. So you should take that opportunity to shop around for the best value. Compare companies based on their coverage, price, and their customer reviews. Great reviews are essential since you’ll mainly be dealing with insurance companies during times of disaster and crisis!
Getting the Right Amount of Coverage
There are many different levels of coverage and you should avoid paying for more than you need. From the HO-2, which covers a broad range of 16 different perils, to the HO-3, which covers all perils except what is specified in the policy, there are many different themes and variations on homeowner’s insurance. Don’t take out more insurance than you realistically need!
Understanding Your Policy
You’ll also want to understand the language of homeowner’s insurance as you’re shopping around for it. Some terms you should be comfortable with include:
- Deductible: The money you pay out of pocket before insurance starts covering a loss
- Liability Coverage: Coverage that pays medical or legal bills if someone gets hurt on your property
- Personal Property: Tangible property such as furniture, clothing, and electronics
- Replacement Cost: Insurance that pays the full cost of replacing your home or personal property up to a limit. Make sure the maximum amount is high enough!
Escrowing Insurance Payments with Mortgage Payments
Most homeowners add their monthly homeowner’s insurance payments to their mortgage check. Lenders then pay insurance premiums and sometimes property taxes out of your escrow account. More than likely, you’ll have to pay one year’s worth of insurance at closing, so make sure you bring information about your policy and the money to cover the premium of the first year to your closing day.
Buying Your Home With Clagett Enterprises
Clagett Enterprises is a full-service real estate company with almost 30 years of experience in the Frederick and Western Maryland area. For assistance selling your home and getting the best possible price, contact us online or give us a call at 301-665-6009. To meet our team and see some of our beautiful homes, follow us on Facebook,Twitter, Pinterest, and Google+.