Purchasing a home involves a number of details that must be attended to, such as scheduling a home inspection, ensuring that all documentation is sent to the mortgage company and title company, and transferring utilities. Another extremely important detail that needs to be taken care of before closing is purchasing a homeowners insurance policy. Since a home is typically one of a person's biggest investments, buying the right homeowners insurance policy is essential to protect a person financially. However, buying the right homeowners insurance policy can be confusing, especially for first time home buyers. Use the following tips to buy the right homeowners insurance policy:
Consider the Cost to Rebuild Your Home
It is not uncommon for people to mistake the cost to rebuild their home with the market value of the home when buying a homeowners insurance policy. Even if you experience a total loss, such as a devastating house fire, you will still own the land that your home is built on. Thus, you do not need to consider the cost of your lot when choosing a homeowners insurance policy amount. Instead, find out how much it would cost to rebuild your home, and use that figure when building your homeowners insurance policy.
Value of Your Belongings
In addition to providing coverage if your home is destroyed or needs major repairs, a homeowners insurance policy will also cover the value of your belongings in the event that they are stolen or damaged by a covered event, such as flooding due to a broken pipe, or smoke damage. Before you purchase a homeowners insurance policy, it can be helpful to create an inventory of your belongings and determine their values. If you own belongings that are exceptionally expensive, such as jewelry or artwork, you may need to add a rider to your insurance policy to ensure that they are fully covered.
Like most types of insurance policies, homeowners insurance policies almost always have a deductible. The deductible is the amount of money that you are responsible for paying for before your insurance company will pay anything on a claim. In most cases, the higher the deductible, the lower the insurance premiums. However, it is important to select your deductible amount carefully. Lower premiums are nice, but if you set your deductible so high that you're unable to afford to pay it in the event of a claim, you will be stuck in a difficult situation.
For more information, you will want to consult a company such as Ideal Insurance Agency.