Finding home insurance for the first time can seem like a complicated process. One that takes you down many roads that you are not familiar with, through offers and options that you are not even sure what they are. That should make it apparent that the first step should start with you.
That means you will be lost through the entire process if you are not educated about the types of policies available and what they cover. You may end up with a contract for insurance that does not help you when you need to file a claim.
The 5 tips for first-time home insurance buyers that follow will get you started on the right path. Just make sure you take your time first and educate yourself on the process from start to finish.
1) Know What You Need
It may seem like a step you can skip over without reading, but that would be a mistake. You need to know what you actually need; otherwise, you may get a policy too low to cover your losses, or you may be paying for more than you need.
You need to take the time to find out what the actual market value of your home is. When you write the amount down on a sheet of paper, you need to put a plus sign next to it. Hence, you know that when you get a policy that covers repairs or replacement, it covers the home’s current value, plus a little extra to allow for fluctuations in the market.
The second thing you need to get values for is the objects in your house that are worth some money that you want to have protected on the contents part of the policy. You must take the same piece of paper and walk around the house and garage. Write down everything you want on the contract, and next to it, jot down the serial number, how much you paid for it, and how much it is worth today. Yes, you will probably have to do some research, but once the list is made, you can add up the values and get a number that you can use as the value of the total content.
2) Get Your Budget In Order
If you do not have a budget, you need to make one. It will show you how much money you have at the end of the month so you can figure out how much you can afford to spend on an insurance policy. It is always best to pay the policy by the year, even if the carrier gives you the option to pay it monthly. It will cost less if you pay the total amount in the beginning. If you do not know how to make a budget, you can download a free template and let it guide you.
3) Get The Policy Set up Early
You do not want to wait until the last minute to get a policy up. You need to get a policy as soon as you know that you are closing on the house. If you are going through a lender, they will require a specific level of coverage before they offer you the money for the mortgage loan. They may try to talk you into going with the insurance coverage that they can add to the mortgage payment, but you want to avoid that. It is usually a rock bottom policy that will cost you substantially more than you should be paying.
4) Compare Insurance Policies
Next, you will want to compare the cost of various policies and the coverage amounts they offer. The easiest way is to go to an online platform like the iSelect home and contents insurance site. They will do all the hard work and send you offers from their partners that will likely work with you to get you a good policy.
All you need to do is go through the offers and compare them. You want to look at the cost, of course, but you need to read the entire offer and see the coverage levels they are offering you for that cost. You will also want to ensure they are not trying to exclude something you need to be covered.
5) Include Your Future
Whenever you get an insurance policy, you must consider the present and the future. For instance, if you plan on building an enclosed add-on to your home as soon as possible, you will want to have that covered on your home policy. You will not know how much it will improve your property’s value, so you want to find a policy that will allow you to make upgrades when you need to. You do not want to get stuck in a contract that does not have a high enough payout to do what you need it to do.
You should know many things before purchasing your first homeowner’s insurance policy. You can do as much research as you need to get comfortable with the process and learn all the jargon that insurance companies use in their contracts.
If you do not feel like you can decipher the papers, you can always take the time to consult with a lawyer or trusted advisor. The bottom line is that you do not want to ever sign a contract that you have questions about. Remember, the only dumb question is the one that is left un-asked.