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posted March 3, 2022

A Guide To Homeowners Insurance For First Time Buyers

With the average homeowner paying roughly $1,300 per year (for a home valued at $250,000), you may be curious how much you’ll be paying as a first time home buyer.

But there’s a lot more than premiums you might want to know about; like when you should purchase homeowners insurance and how to make the right choice in the sea of options.

Here’s what you’ll learn in the guide to home insurance for first time buyers:

7 FACTORS THAT AFFECT HOMEOWNERS INSURANCE

First and foremost, it’s important to understand that the total premium homeowners pay for insurance is unique to each and every home. Here are seven factors that play the biggest role with your homeowners insurance:

  1. Coverage: Depending on the extent of coverage you select, your price will vary. Home insurance policies can extend various amounts of protection depending on your individual needs.
  2. Deductible: The amount you pay out of pocket before your insurance policy kicks in (known as your deductible) may be chosen at different levels. The higher the deductible, the lower your premium because you take on more risk if something goes wrong.
  3. Home value: Generally speaking, the more expensive the home, the more expensive the insurance.
  4. Features: The home’s characteristics — things like the age of your home, type of construction, wiring, type and age of roof, etc. — can all affect your premium.
  5. Insurance history: If you have a history of making insurance claims (even with renters insurance), there’s a potential that it will affect your premium or make it more difficult to find a company willing to take the risk.
  6. Location: Not only does your geographic location make a difference (what city and state you live in) for your homeowners insurance, but so do things like distance from fire hydrants and fire stations.
  7. Personal information: Information like age, credit history, and even marital status can change how much you pay for insurance.

5 TYPES OF HOMEOWNERS INSURANCE COVERAGE

Not all homeowners insurance is required, nor is it all alike. It’s vital to understand your needs — and the needs of your new home — for if and when a claim is necessary. Here are five types of homeowners insurance coverage you should know about:

  1. Property damage: Coverage may be purchased to cover not only your home, but also other structures that may be on your property.
  2. Personal property loss: Covered contents or personal belongings will be covered due to damage, theft, and any other situation your policy covers. Read your policy carefully, as some belongings may need special coverage.
  3. Personal liability: If someone is hurt on your property, liability coverage may help provide financial protection.
  4. Riders or special endorsements: If you have collectibles or antiques in your home, you’ll likely need these additional portions of the policy to cover the personal property in full.
  5. Add-on or additional policies: If you live in an area with damaging weather conditions (such as fires, earthquakes, hurricanes, etc.), an additional policy may be recommended and/or required.

As always, refer to your unique policy, as each one is unique in its exclusions and limitations.

WHEN SHOULD YOU BUY HOMEOWNERS INSURANCE?

While your homeowners insurance policy won’t start until you close on your new home, it’s important to have a plan ready to go. That way, you’re not scrambling at the last second and stuck with whatever plan you can secure.

Instead, start the process even before you make an offer on a house. Before making an offer, make some connections with trusted homeowners insurance brokers.

Being proactive helps for two reasons: 1) you’ll know approximately how much a policy will cost for that particular home, and 2) the quote will be ready to go, so that once you have a closing date, your insurance agent can begin the policy.

HOW TO GET HOMEOWNERS INSURANCE QUOTES

If this is your first time purchasing homeowners insurance, the process can seem overwhelming. Not only do you have a lot going on with the purchase of your first home, but you also have to pick the best coverage for it.

Here’s what you need to know to start getting homeowners insurance quotes.

Basic Information

At a minimum, you’ll need the following information to gather insurance quotes:

  • Home’s address
  • Personal information (for claims and credit check)
  • Home’s added safety features (e.g. fire alarms, home security, etc.)
  • Roof’s age (older roofs can have trouble getting coverage)
  • Type and amount of insurance coverage needed

4 Tips to Find the Right Insurance Carrier

Get several quotes from multiple homeowners insurance companies to ensure you choose the best option for you and your family. Then, as you do so, consider these four tips:

  1. Focus on coverage: Purchase the coverage that is right for you and to properly protect your home. Mortgage companies will have minimum levels of coverage required to provide a loan. Your mortgage representative will provide you or your insurance agent with the bank’s information.
  2. Claims satisfaction: Find out how often your potential insurance carrier covers claims. Some companies have notoriously low claim coverage and may not be the right fit. A simple Google search will put you in the right direction!
  3. Understand coverage: Spend some time reviewing coverage options above to see what’s going to be right for you and your new home. Then, don’t forget to pay attention to what’s not included; many policies will have exclusions for certain disasters. What’s more is you may need to have special add-on coverage depending on your location (for situations like hurricanes, flooding, wildfires, earthquakes, and so on).
  4. Bundling options: If you have other insurance policies with a carrier (like your auto insurance or even life insurance), many companies offer bundling discounts.

2 TIPS TO SAVE ON INSURANCE FOR YOUR FIRST HOME

Most new homeowners are looking to save money wherever possible; and, as we mentioned, you should never skimp on coverage. Even after shopping around to price out plans in advance, there are some additional ways to potentially save money on your first homeowners policy.

  1. Remember that choosing a higher deductible will cost more at claim time: While in the short-term, a low premium, high deductible plan costs less on a monthly basis, it may not always be the best long term bet if savings are tight. When a disaster or incident occurs, you’re responsible for that large deductible first. Consider weighing the short-term versus long-term options when you choose your plan.
  2. Never skip the home inspection: Not only can a home inspector help in unexpected ways (like offering suggestions that will ultimately discount insurance costs), but you’ll also find out about potential issues before they become major insurance claims. Problems like termite damage, air conditioner replacement, and rotting wood are all substantial concerns that your homeowners insurance policy may or may not even cover.

Follow this guide as a new homeowner as you go through the process of purchasing homeowners insurance. Keep these key areas in mind to secure the best coverage at the best rates.

If you need help finding the best homeowners insurance coverage for the best price, start by speaking to a SimplyIOA agent at 833.872.4467 or get a homeowners insurance quote online now.

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