Looking for a new house can be such a roller coaster ride. Open house after open house. Endless discussions. Writing out all the pros and cons. SO many emotions involved, but you made it! You finally found the right one! Now it’s time to work through the home buying process, which can be intimidating and overwhelming. There are a lot of pieces to understand to make the puzzle come together. One of those important pieces is home insurance. Let’s take a look at what home insurance covers.
What does home insurance cover?
Home insurance covers the dwelling, personal property and liability. Let’s look at each of these in more detail.
Your home is your dwelling. First, a replacement cost is calculated to determine coverage. This is NOT the purchase price of the property or what you would get by selling the property. Instead, the replacement cost is what it costs a contractor to rebuild the structure from scratch. The same square footage, the same roofing material, the same flooring and the same type of home construction are used for this calculation. No better, but no worse!
Do you know what the biggest mistake homeowners make? According to an article in Forbes, the biggest mistake is failing to have enough insurance to cover the cost of rebuilding a home if it is destroyed! Most people insure an amount equal to the current value of the home. In reality, this amount could be far less than the cost of actually having to rebuild! Do not fret! An insurance professional can certainly assist here. Next, let’s take a look at personal property.
Personal belongings within a home make up personal property. This includes items such as furniture, electronics, and appliances. A percentage of the replacement cost determines the initial amount of coverage. More coverage can be added for an additional premium. Adding individual items is called scheduling of personal property. Collectors schedule such items as baseball cards, antiques or coins. It is also wise to schedule jewelry, firearms and fine art.
Another way of protecting personal property is through water backup coverage.
True or false: Only homes with basements need water backup coverage.
False! This is a common misunderstanding! Backup issues can cause problems in all homes, not just those with basements. Water backup coverage is recommended for all policies! Sewer or drains backing up into the home can cause significant damage to personal property and the dwelling. Finally, let’s review liability.
Non-owners may be on your property for various reasons:
- The mailman drops off letters and a package.
- Your babysitter comes over to hang out with the kids for date night.
- The family all gets together for a birthday celebration.
- A neighbor walks across your property to get back home.
Even though we do not anticipate these things, accidents and injuries happen. So, liability coverage is very important!
Liability coverage provides protection if someone gets hurt on your property due to your negligence. Here are some real life examples:
- A visitor falls on the sidewalk and breaks a hip.
- A child steps on broken glass in the yard and cuts her foot.
- The dog bites the mailman.
We never want these situations to happen. However, if (or when) they do, proper protection is key.
There are various option limits to protect personal assets appropriately. Adding an umbrella policy is wise to consider also! The additional coverage not only makes sense, but it is affordable. Check out this example:
- Your current home and auto policy liability limits are $500,000.
- You add an umbrella policy with $1,000,000 worth of coverage.
- You now have $1,500,000 in liability coverage!
It is better to have it and not need it, than not have it and wish you did!
This is an exciting time for you! We want you to enjoy your new home and rest easy at night knowing everything is properly covered. We will do our best to make every step of the insurance process as easy as possible. Click on the image below to get the process started. We will take it from there.