Many first-time homebuyers overlook the fact that home insurance is not one of those optional considerations, but it is also likely to be a requirement for a mortgage. After all, if anything tragic happens to your house, you’ll need to file a claim with your homeowner’s insurance.
Buying an insurance policy can be a simple process, particularly if you already have a trusted insurance agent. Remember that many lenders would require you to open an escrow account to make sure your taxes and insurance are paid upfront. In any case, here are some home insurance dos and don’ts to keep in mind.
DO’S
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Do: Get Full Coverage
There’s nothing to gain by cutting corners on your home insurance. Many mortgage lenders will insist on extensive coverage, and you should do all you can to protect your most valuable asset. Comprehensive coverage protects not only your home, family, and belongings, but also covers personal injury if someone is injured on your property.
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Do: Make a List of Everything You Own
Keep track of your most precious possessions at all times. Keeping a digital journal of all of your valuables, along with their values at the time of purchase or appraisal, might save you a lot of grief in the event of a total disaster.
It also aids in understanding what your insurance is capable of replacing and provides a starting point for ensuring that you have sufficient coverage not only for your home but also for the replacement of your possessions.
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Do: Speak With a Mortgage Expert
Mortgage experts can be one of your most valuable allies, as they have likely dealt with hundreds, if not thousands, of home loans. They are also familiar with the insurance and coverage standards of a particular lender, as well as escrow accounts. Contact them to learn more about your options.
DON’T’S
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Don’t: Bundle Your Insurance
For the sake of convenience, one mistake homeowners make is to combine home, auto, and life insurance into one package. While this is always fine, there are a variety of reasons to shop around and make sure you’re getting the most coverage for your money. Bundling insurance can help you save money on certain aspects but shopping around can help you save even more.
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Don’t: Forget to Review the Coverage
Most insurance plans cover a wide range of items and will payout if they have been damaged, stolen, or destroyed in the event of a claim. However, read the policy you’re about to sign carefully to ensure it covers everything you need.
