Homebuying steps like appraising the property and the inspection may be more obvious for this point in the homebuying process, but insurance is right up there. Here’s why we’re dealing with it now, and not closer to closing.
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As soon as the property title is in your name and the keys are in your hands, the property is your responsibility. So, you’ll need to have the property insured from day 1, which can take multiple days and a bit of back and forth. Your insurance agent will take into account things like the type of roof on the home, age of the property, and even proximity to water. This can all take a bit of time, so you wouldn’t want to wait until the last minute.
Most homebuyers use an escrow account to pay for things like insurance premiums and property taxes. (This is usually a loan requirement by lenders, but there are exceptions to waive the need for an escrow account. If you don’t have an escrow waiver, you can assume you’ll have an escrow account.) The calculations for your escrow account are set up well before closing, and your insurance payments need to be included.
What to expect when setting up homeowner’s insurance.
It’s a bit of a life hack, but one way to find out about an insurance company’s reputation is to speak with someone who works for a home improvement company, like roofing or HVAC, in your area. If they deal with insurance, they’ll know which ones in your area make the claims process easier, have good response times, and great customer service. After all, is the insurance that great if you have to wait 3 months to get a siding project approved?
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Here are a few things you can do to make the process easier:
Homeowners insurance typically covers damage or loss to your home, personal property, and liability in case someone is injured on your property. Here are some of the most common types of coverage you'll find in a homeowners insurance policy:
Dwelling Coverage: Pays to repair or rebuild your home if it's damaged or destroyed by a covered event, such as a fire, hurricane, or other natural disaster.
Personal Property Coverage: Pays to replace or repair your personal belongings, such as furniture, electronics, and clothing, if they're damaged, destroyed, or stolen.
Liability Coverage: Protects you if you're sued for injuring someone, or for damaging their property while on your property. It can cover legal fees, settlements, and judgments.
In addition to these common coverages, you will typically have the option to add-on coverages, such as:
We can connect you with an insurance agent to review your needs and any potential coverages that will help protect your home and property.
Understanding what goes into the cost of homeowner's insurance allows you to make informed decisions. Here are a few of the most prominent features to determine your premium cost.
Property Factors
Personal Factors
Coverage Factors
Now, you’re an informed insurance buyer.
You know what to expect, know what goes into your coverage costs, and have a few tips in your back pocket for making a great decision. Happy insurance hunting!