Buying a New Home? Tips to Protect & Insure

Buying your first home can be both exciting and scary.  Home insurance is another issue that adds to the anxiety of homeowners.  If you’re like most people, the word” insurance” is a foreign language.  Following are a few tips to help you insure your home appropriately:

Cover your house for replacement cost – not market value

Many people have the misconception that they should only insure the value of their home up to market value of the house.  What happens if your house burns down to the ground and you need to rebuild?  Market value is the cost to sell a home, not to rebuild one.  There are additional costs associated with rebuilding a home.  You will need an engineer to design it, you will have to pay for the contractor, and you will need to pay for materials.  Remember home builders have a budget to build multiple homes and save money:.  Since you’re not a home builder, you  can’t expect the same savings.

Cover your furnishings

Sometimes homeowner’s get caught up and don’t calculate the exact replacement cost of their personal belongings.  If you don’t set the limit on actual replacement cost, then the percentage of home value automatically given to contents coverage could be insufficient.

Equipment Breakdown

Be sure to add coverage for equipment breakdown.  If lightning strikes your air conditioner and causes it to go out, you want to make sure that you have coverage to replace the system.  Homeowner’s policies have so many things that are excluded.  Adding this endorsement for breakdown coverage, will provide coverage to get around some of these exclusions.

Cover Special Items

Jewelry, Furs, Silverware, China, Oriental Rugs, and Musical Instruments are not covered by the contents section of the policy.  These items have to be specifically named and covered by an inland marine policy.   Be sure to itemize your special items and keep the receipts or obtain appraisals to ensure adequate protection.

Personal Liability Insurance

A section of the homeowner’s policy provides coverage for your personal liability.  If someone falls and hurts themselves at your home, the liability section of the home owner’s policy provides coverage.  Be sure to request the highest limit available.  This part of the policy generates the least amount of premium and having the highest limit ensures you’re never under-insured for that unforeseen accident.

Not all Risks Are Insurable

Be sure to let your insurance agent know if you have a swimming pool or a trampoline.  Some insurance companies don’t cover these risks.  You definitely don’t want to find out that your pool and trampoline are excluded when you have a claim.  Another issue is dogs.  Certain breeds are not insurable.