Bad things happen every single day, turn on your local or national news channel and it’s right there. Some horrible tornado or flood or fire has just decimated huge areas of real estate. These are daily reminders of the importance of home insurance. When things go bad its good to know that eventually you will be made whole. Even if you disagree with me, most lenders require you to buy insurance as a condition of getting a mortgage.
As a first time home buyer I will admit that I was not well versed in home insurance. I have had car insurance for my entire adult life and I have a small life insurance plan, but home insurance was foreign to me. I gave myself a bit of a crash course and this is what I took away form the experience.
- Understand Your Coverage Levels – When speaking on the phone with various agents, I made sure that we reviewed each line of the policy and asked questions about anything I didn’t understand. In my case I found that the recommended levels of coverage met almost all of my needs.
- Flood Insurance? – I thought long and hard about this. “Super Storm Sandy” really devastated my region and the saddest thing was to meet people that had their home destroyed and didn’t have flood coverage. My future home is miles from any type of water so I opted not to get it, but I did buy back up coverage. This coverage insures me against the sewer or water pipes in my home backing up into my basement.
- Guns, Pools, and Trampolines – These are the three red flags of home ownership, and one of them will raise your premium. Something to keep in mind.
- Shop Around - I got four quotes, all for the same coverage. The first one was $3700, the second was $2600, and the last two were $1400. I went with Allstate, because of their low price and the local agents professionalism and willingness to help me.
- Bundle - My agents recommended bundling my home and auto insurance together. This allowed me to reduce the cost of both. All in I am paying about $3500 a year for home and auto for both my and my wife’s cars. I saved thousands of dollars a year by shopping around for the best price and bundling my coverage.
The last thing to keep in mind is that to do this right takes time. Every quote took me about an hour. The agent needs loads and loads of information from you, when was the home built, square footage, types of construction, the list goes on and on. It can be tedious but its extremly important and if you do your homework you can save a ton of money. I hope this helps.