Buying a new home? Keep these tips in mind when shopping for new home insurance:

by Alex Chesko | April 8th, 2016

newhome

Purchasing a new home can be a daunting experience.  It’s easy to become overwhelmed by the rush of details and deadlines. You know you need to have insurance – but it’s an item that’s often glossed over as just one more box to check off the list.

Here are some important items you need to consider when purchasing insurance for a new home:

BUY ADEQUATE COVERAGE FOR REPLACEMENT 

If your beautiful new home suffers a total loss you want to have enough coverage to rebuild it – seems like a no-brainer right?  The bank usually tells you how much coverage you need to have to get a mortgage.  But beware – the amount they list is only designed to protect their investment.  It may not be nearly enough to rebuild from scratch.  Make sure you’ve had your insurance agent calculate the cost to rebuild your home and purchase that amount of coverage on the dwelling.

IT’S ALL FUN AND GAMES UNTIL…

From an insurance standpoint, there are a number of things that can cause a significant increase in the risk (and therefore price) associated with a new home policy.  Features like swimming pools and trampolines are considered “attractive nuisances” because they attract neighborhood children who want to use them with or without the permission of the home owner.   Insurance companies aren’t eager to write a policy for a home with a trampoline, since they are almost guaranteed to result in a serious injury claim.

trampolinedanger

YOU GET WHAT YOU PAY FOR

A home insurance policy is a contract.  In exchange for your premium, the company agrees to pay up in the event of a covered loss.  But not all contracts are created equal, and you don’t want the cheapest contract you can find.  Be wary of budget policies that cut corners and skimp on important coverage.  You could be in for a rude awakening if you have to file a claim.  Some policies limit how much they will pay for certain types of property (jewelry, sporting goods, art, etc.) or limit the types of damage they will cover.   Others factor in depreciation when calculating the replacement value of your personal items.  Make sure you’re shopping for value and not just rock bottom price!

WATER, WATER EVERYWHERE!

Pay attention to where your new home is located.  Is it in an area prone to flooding?  If it’s in a valley, or near an existing water source (lakes, rivers, streams, etc.)  you might be surprised to learn you’re in flood zone.  Check out http://msc.fema.gov or www.floodsmart.gov to find out what your risk level is.  Damage from flooding is never covered under a homeowner’s policy – you’ll need a separate flood insurance policy.  Another often overlooked coverage is the backup of water through a sewer or drain.  It’s usually an optional coverage that can be added on to a home insurance policy.  It is definitely something you want to have on your policy.  If your basement floods because of your sewer backs up or a water main breaks you can be stuck “holding the bucket” without it.

THE SKINNY:

If you’re moving from one house to another it’s important to remember the price of your new insurance policy is going to be different.   Things like square footage, the age of a home, construction materials, neighborhood crime rates, even the distance to the nearest fire department are factored into the cost of a new policy.  The best thing you can do is speak with an independent insurance agent who knows the area and works with multiple companies.  They can comparison shop several companies at once, answer questions, and help you determine the level of coverage that’s right for you.

Happy hunting!