The Best Home Insurance For New Homebuyers

Finding the best home insurance as a new homeowner can be daunting. There are a number of companies from which to choose, and coverage options can be confusing.

There are certain features that make sense for a new homeowner to consider.

Replacement Rider

When you are a new homeowner, it is likely that you owe a great deal on your home and have very little equity in it.

You may also have a young family, and/or be starting out in life and have little savings or emergency cash built up.

For these reasons, you should purchase a guaranteed replacement cost rider on your homeowners insurance policy.

A standard cash policy will calculate the depreciated value of your belongs and your home. For example, say you had a couch for which you paid $700, but you had it three years before you suffered a small house fire that ruined the couch.

The insurance company would calculate how much the couch was worth at three years old, and pay you that amount. So you might get $150 or $250 to compensate you for the loss of your couch. If the couch were even older, you may get as little as $50.

Most new homeowners can’t make up that kind of price difference.

The replacement cost on the home itself is vital. The cost of building materials goes up frequently. You cannot build a new home for a current appraised value of your own home, generally speaking. Therefore you want a policy that will pay you to be able to replace your home.

Rental Coverage

Be sure your policy covers any renting you may need to do while a home is being repaired or rebuilt.

Restoring and rebuilding may take months or even years, and you will have to have another place to live as the work is being done. Make sure your insurance policy covers that kind of living expense.

Establish Adequate Property Values

Generally speaking, the insurance company will give coverage on personal possessions based on a percentage of the value of the home. Fifty percent is standard.

While this may be plenty to cover the standard items in your home, think about any high value items you may need to cover separately.

Do you have expensive jewelry or art? The per item values of general personal property is limited under the standard policy, so individual riders on expensive items are a great idea.

Hold Back the Flood

You may be unaware that your homeowners policy does not cover many water related problems.

While it will generally cover a broken dishwasher hose that floods the kitchen, it does not typically cover water rising from a storm drain, sewer backup, sump pump failure, or flooding caused by excessive rain.

New homeowners may want to consider buying this extra coverage.

If you decide you should have flood insurance, you can purchase that through FEMA, at an average cost of $372 per year. Although the cost seems high, it will seem like a pittance if you are caught in a flood situation.

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