When buying a new home, there's a lot to think about. From getting your family from Point A to Point B, decluttering, and other moving logistics, one of the biggest oversights when buying a new home is overlooking homeowners insurance.
It's important to decide which policy is best for your new home before it's too late. To help first-time home buyers understand the basics, here's the rundown from Ryan Homes at Brunswick Crossing:
Types Of Homeowner Policies
Though every insurance company is different, especially from local to national, most in Maryland have the following policies:
- Dwelling coverage. This pays to repair or rebuild your home, including electrical wiring, plumbing, and HVAC, if the damage is covered by the cause of loss.
- Other structures coverage. This pays for damages to detached structures like garages, sheds, fences, and cottages on your property.
- Personal property coverage. This reimburses homeowners for their personal items, including furniture, artwork, clothes and jewelry, data, and electronics, that may be damaged or destroyed by a covered cause of loss.
- Loss of use coverage. This pays for a homeowner's additional housing and living expenses if they must temporarily move out of their home while it's being restored.
- Liability coverage. This helps protect any assets and covers defense costs in the event of a lawsuit because you or your family are responsible for causing injury or damage to another or their property. The most common example is dog bites or cat scratches.
What Homeowners Insurance Covers
Homeowners insurance (usually) covers damage to structures and personal property that could be caused by the following:
- Fire or lightning
- Windstorm (hurricanes and tornados)
- Weight of snow, ice, or sleet
- Riot or civil commotion
- Sudden or accidental smoke
- Aircraft or vehicle
- Falling objects
- Theft or vandalism (also known as malicious mischief)
- Freezing of plumbing, HVAC, and fire protection systems or appliances
- Artificially-generated electrical current
Many local and national homeowners insurance companies cover more than the list above, so check with a few insurance companies about your potential new home's policy before committing.
What Homeowners Insurance Doesn't Cover
Unfortunately, many homeowners insurance policies typically don't cover damage caused by the following:
- Earthquakes* and earth movement (like sinkholes)
- War and acts of terrorism
- Nuclear power plant accidents
- Sewer backup
- Termite infestation
- Intentional loss
- General power failure
*According to the Insurance Information Institute, "Flood coverage is provided by the federal government's National Flood Insurance Program, although it's purchased from an insurance agent. Earthquake coverage is available either in the form of an endorsement or as a separate policy."
Whether you're buying your first new home or moving from one house to another, remember to purchase homeowners insurance before "in case of emergency" becomes reality. Here are a few tips to insure your new home to value:
- Insure your home for the total amount it would cost to rebuild your home. If you don't have sufficient insurance, the company may only pay a portion of the cost for replacing or repairing damaged items.
- Get a quick estimate on the amount to rebuild your home from the homebuilder and/or your local insurance agent or company representative. Note that this is only an estimate and shouldn't replace annual coverage reviews.
- Find the determining factors. A few things affect your coverage, including construction costs, square footage, type of exterior wall construction, your new home's style, the number of rooms and full bathrooms, roof type, attached garages, fireplaces, exterior trim, and other special features like arched windows or unique interior trim.
- Don't insure your home for market value. According to experts at Rocky Mountain Insurance Information Association in Greenwood Village, Colorado, "The cost of rebuilding your home may be higher or lower than the price you paid for it or the price you could sell it for today."
- Advise your insurer and increase the limits of your policy if you ever make improvements or additions to your new home.