Home insurance is an essential part of buying a house. However, many homebuyers end up feeling so overwhelmed by the buying and closing process that they simply accept whichever home insurance provider their Realtor® recommends.
While your Realtor® may recommend an insurance provider that has drafted good quotes for their clients in the past, the agent might not be right for you. The best way to choose the right home insurance provider is to shop around and see what kind of offers are available to you.
There are three main sections you need to focus on within your home insurance quote:
- Property coverage
- Liability coverage
- Optional coverage
We will review what each of these and look at how you can get the insurance you need to keep your home and family safe.
At face value, the property coverage section of your home insurance quote covers your home and everything in it. However, you will notice that your quote is broken down into four sections, each one covering different elements of your home that could be damaged and your recovery from their damage.
- Dwelling protection covers your physical home. This may include your roof, windows, carpets, and anything else that is built into your house.
- Other structure protection protects structures on your property that are not attached to your dwelling. For example, a shed, a detached garage, or a guesthouse would fall into this category.
- Personal property protection refers to all of the possessions within your home, from your blender to your TV and jewelry. If something were to happen to your home, you would also need these aspects replaced in order to return to normal life.
- Additional living expenses is a protection that covers loss of use. If something happens where you can’t use your home, this coverage will pay for hotel or rental stays and other costs like eating out instead of being able to cook.
With this breakdown, you can see how two similar homes would have different insurance rates if one has a detached guest house and another doesn’t. There are different types of property that affect the livability and repair costs to the home.
If property coverage protects all of the physical elements of your home, then liability coverage protects all of the human aspects of the house. This is also called the “slip and fall” section of your home insurance quote because it compensates people who are injured on your property because of your negligence.
For example, if a neighbor slips on your icy driveway, this section will cover it. If your dog bites the mailman, the mailman’s injuries are covered. If a railing breaks on your stairs and a family member falls, they are covered.
These are things that you never want to think about happening. But, it’s important to know that you aren’t at risk of getting sued or paying the medical bills for someone’s injury when you have this coverage.
These liability limits usually start at around $100,000, which can cover a significant injury. However, you may want to increase them if there are parts of your property that you think are dangerous to people.
Every homeowner will likely have both property and liability coverage. However, there are additional coverage options that some people will need over others. This is where optional coverage comes in.
These are just a few examples of it:
- Flood insurance covers damage related to floodwaters and is common in areas near lakes or rivers, or areas generally prone to flooding.
- Earthquake insurance covers structural damage in the event of an earthquake.
- Sewer backup insurance protects your home if the sewer backs up and spills into your home.
- Ordinance insurance is used when you need to update your home to meet building codes after it has been damaged. This is often used in older homes that may be exempt from code upgrades until they need to rebuild.
As you can see, many of these options are highly specific to the needs and region of the homeowner. Someone living in the desert won’t need flood insurance, while another homeowner living in California might pay extra for earthquake coverage.
Make Informed Choices for Your Home Insurance Quote
Now that you know what each section of your home insurance quote covers, you can make the right choice for your needs. Seek out quotes from a handful of providers and compare the costs and coverage. You may find that the best offer isn’t the cheapest, but it gives you the most coverage for the price.
If you haven’t started the homebuying process yet and are just beginning your search, start with Effective Agents. You can find a Realtor® who specializes in working with first-time homebuyers who can guide you through choosing home insurance as well as navigating closing costs, mortgage options, and other complicated details of buying a home. Find your ideal Realtor® today.