New home, new insurance
If you're buying your first home, the world of home insurance can seem pretty difficult to navigate. Fortunately, it's not as complicated as it looks. There are really just a few things you need to know before getting started.
When do I buy insurance?
The best time to buy insurance is as soon as you start to take responsibility for the home, that is to say, as a part of the closing process. Even if you haven't moved in yet, you don't want to wind up making payments on a pile of boards and pipes torn apart by a tornado.
Most lenders will insist that you buy a year of coverage on your home before closing. This will be a part of your closing costs generally paid in a single lump sum, including lender fees, down payment and so on.
Do I have to buy insurance up front?
If you are buying your home with cash, you might be free to buy whenever you like, but the sooner the better. Though you are not legally required to carry insurance on your home as you are with your car, you take on quite a bit of risk when you go unprotected.
Unless you have the resources, and the willingness, to pay for all damages and liability costs out of pocket, there is really no good reason to go without insurance.
How much insurance do I need?
A basic policy is going to cover a certain amount of liability and a number of protected perils. These will generally include fire, lightning, windstorms, hail, vandalism, theft, falling objects, vehicles and aircraft, and even frozen plumbing. You may also be protected in the event of a riot.
You will generally not be protected from flood, and different insurers may have different exclusions. For instance, some policies will not cover wind damages by default. However, the more you buy, the more likely you are to have more comprehensive coverage.
Always know what you're buying. Read your policy, ask your home insurance provider any questions you may have, and consider buying additional coverage if you feel under-protected.
Insurance is not an industry that necessarily thrives on up selling in the same way as many other industries do. It's a competitive market, with most insurers striving to offer the best protection for the lowest price. In short: You can generally trust your agent to talk you through the process honestly and with your costs in mind. Buying home insurance may feel overwhelming at first, but it's not as complicated as you might suspect.