A Guide to Home Insurance for New Home Buyers

Buying a new home can be an exciting yet terrifying adventure. A home is a huge investment and there are many different aspects to consider, like the neighborhood, the house itself and the insurance. The insurance is possibly the most confusing part of the process and it’s easy to get frustrated and just sign up for whatever the agent suggests. Understanding the basics of home insurance is one big step to choosing the right insurance and making sure your home and family are covered. 

Before you start shopping for home insurance, check your credit rating. Your credit rating can raise or lower your interest rate depending on if it’s good or bad. In general, you want to have a 750 or higher for very good credit. If you have less than 600, it’s going to be harder to find a cheap home insurance rate. You can work to improve your credit through paying bills and investing in a credit card. 

What Does Home Insurance Cover? 
In general, a basic homeowner’s insurance policy covers: 

• Dwelling: Dwelling coverage helps pay for repairs or a rebuild when the dwelling (home) is damaged by one or more listed perils. Covered perils include fire, hail and tornadoes. 
• General liability: General liability steps in when bodily injury or property damage occurs to another person while on your property. 
• Pet liability: Pet liability steps in if your pet causes bodily injury or property damage to another person. 
• Other structures protection: Dwelling coverage only pays for repairs on your home and its attached structures. Structures such as detached garages and fences are covered beneath other structures protection. 
• Additional living expenses (ALE): ALE helps pay for living expenses if you must live somewhere else while the house is under repair. 

An additional coverage you may want to consider us a personal property endorsement/floater. Some belongings aren’t covered under your typical homeowners’ insurance. Expensive items like jewelry may not have coverage under your policy. A personal property endorsement or floater helps pay for expensive or rare items that are lost or damaged due to a peril. 

What Does Home Insurance Not Cover? 
Homeowners insurance typically doesn’t cover flooding. You can purchase a separate flood policy if your area is prone to a lot of rain or floods to protect your home from possible damages. Earthquake damage is also usually excluded. Speak to an insurance agent about adding additional coverage to your policy. 

Understanding Home Insurance Premiums 
There are many factors that affect your home insurance premiums. Factors that may cause your home insurance premiums to be higher (besides the general market) include: 

• Living close to a coastline. Weather damage is more likely closer to the coastline, which usually costs more to insure. You may also have to purchase a hurricane or windstorm deductible. 
• Moving into an older home. Older homes can cost a lot to insure since they often require costly repairs and can be seen as less safe if they haven’t been maintained. 
• General condition and construction. A home with a roof that isn’t fire or hail resistant may cost more than homes with roofs that are. The construction also matters. If the foundation is weak, you’ll have to bring your home up to code and it may cost more to insure. 
• Swimming pools. Structures like swimming pools typically require more liability insurance since it’s an additional risk of injury.

Be sure to have the new home inspected thoroughly for any possible areas of concern and check the loss history report to see any claims that were made in the past.