As a first-time home buyer, purchasing homeowners insurance is one of the most important decisions you’ll make. It serves as a safeguard for your home investment and can provide crucial coverage if unexpected damage occurs from pipes that burst, earthquakes, fires, and more.
Public adjusters have seen the importance of comprehensive homeowners insurance and how choosing the best policy can make a key difference in receiving a fair settlement in the case of disasters.
Find out what to look for when choosing your insurance policy to ensure you have the full coverage you need.
Benefits of Homeowners Insurance
Homeowners insurance policies can offer a variety of benefits for first-time buyers, including:
- Covering your home’s structure and personal belongings if they are damaged or stolen
- Protecting you from legal and medical expenses if someone is injured on your property
- Covering the cost of temporary housing if your home becomes uninhabitable due to covered events
- Peace of mind that you have financial protection against unexpected disasters
Each policy is different, so it’s important to understand exactly what is covered and not covered under a policy before choosing one.
What To Look For in Homeowners Insurance
When selecting a policy, here are important factors you should consider having included in your policy:
Dwelling Coverage: Repairs to your home or rebuilds of your home in the case of damage from covered events such as fire, storms, water damage, and vandalism or theft. Your policy will have a dwelling coverage limit which represents the maximum amount your insurance company will pay to repair or rebuild your home if it’s damaged or destroyed by a covered event.
Personal Property Coverage: Protects your belongings, including furniture, electronics, and clothing.
Liability Coverage: Offers financial protection if someone sues you for injuries or damages they sustained on your property.
Additional Living Expenses Coverage (ALE): Sometimes the damage is so severe, the home becomes uninhabitable. ALE covers the costs associated with living elsewhere while your home is being repaired.
Medical Payments Coverage: Pays for minor medical expenses if someone is injured on your property, regardless of who is at fault.
How Much Does Homeowners Insurance Cost?
The exact cost of homeowners insurance will depend on several factors, including the below. The price can vary by state. In 2023, the national average was $1,428 per year for a policy with $250,000 in dwelling coverage, according to Bankrate.
- Location: Homes prone to natural disasters might have higher insurance premiums
- Home Value: Homes with higher values might have higher premiums
- Coverage Amount: The higher the insurance coverage limit, the higher the premiums
- Deductible: A higher insurance deductible can lower your premium
- Credit Score: A lower score might mean paying more in homeowner’s insurance premiums, while a higher score might lower the amount
When to Buy Homeowners Insurance
Homeowners insurance coverage should be purchased before closing on your new home. A mortgage lender will also require proof of coverage before finalizing a mortgage. This means if you’re considering purchasing a home, it’s important to begin looking for insurance sooner rather than later.
Are Floods Covered by Homeowners Insurance?
Homeowners insurance does not cover flood damage in most cases. You will most likely need to purchase a separate flood insurance policy through the National Flood Insurance Program (NFIP) or through a private insurer.
If you aren’t sure whether or not you need flood insurance, you should assess your property’s flood risk to determine if this type of coverage is necessary.
Frequently Asked Questions
Homeowners insurance is a policy that provides financial protection for your home, personal belongings, and liability in case of unexpected events like fire, water damage, marijuana damage, earthquakes, vandalism, or theft. As a first-time homebuyer, it’s crucial to protect your investment, ensuring that you have the financial security to rebuild or repair your home to its original state (often referred to as the replacement cost).
Research multiple homeowners insurance companies to compare rates, coverage options, and customer reviews. Look for a company that offers the coverage you need at a competitive price and has a reputation for excellent customer service.
Personal property coverage protects your belongings, such as furniture and electronics, in case of damage or theft.
Many home insurance companies offer discounts when you bundle multiple policies (such as homeowners and auto insurance). Bundling can potentially lead to significant cost savings, making it a wise choice for first-time homebuyers.
Yes, liability insurance is typically included in a standard homeowners insurance policy. This is an important part of coverage since it offers protection if someone is injured on your property and can help cover legal and medical expenses.
Homeowners insurance is an important investment for first-time buyers, offering protection for your property, personal belongings, and providing significant financial security. Understanding the factors that influence your premiums and knowing when and what to purchase will help you make informed decisions and ensure you have the coverage you need.
Get Help From a Licensed Public Adjuster
If you’ve experienced property damage, we can help get you the settlement you are owed. At Excel Adjusters, we specialize in residential and commercial property loss for water, fire, wildfire, earthquake, flood, and theft. To this day, we have handled over 2,000 damaged property claims. Our highly trained team of professionals identifies, quantifies, and establishes the full extent of your loss with your insurance company. Our experts relieve you of the intricacies and complex procedures that come with handling claims in English, Korean, Chinese, and Vietnamese throughout the entire process.
