Buying a first home is an exciting time, but there’s a lot you’ll need to do. One of the most important tasks you’ll have is to choose a homeowner’s insurance policy. There are tons of options available today with quotes that can range from a minimal amount to something more than you thought you’d ever have to pay. How do you know which one is the right policy for you? There are a number of things you’ll want to find out before you pick a homeowner’s insurance policy.
What Changes the Coverage Cost?
The quotes you receive when you are trying to find a home insurance policy can vary because there are so many different variables to consider. Some insurance companies will offer discounts for certain situations while others may have higher base limits for coverage.
It is important to read through and compare policies to find one that’s going to be a good deal while still offering as much coverage as possible. Knowing how to read the policy and what all the terms mean is vital if you’d like to compare your options.
The Cost to Rebuild
Perhaps the biggest component in a homeowner’s insurance policy is the cost to rebuild. If something happens to the home and it’s completely destroyed, how much will it cost to rebuild it? Keep in mind that this should not include the value of the land underneath the home. It’s just going to be the cost to rebuild, so it will not be the same as the appraised value that does include the land. It also may be a good idea to have this a little higher than the minimum, as prices for materials can fluctuate over time and you’ll want to make sure it’s all covered.
Replacing Personal Property
You have a lot of belongings in your home. How much would it cost if you had to replace everything? Chances are, it’s a lot more than you realized. If you own a lot of items, especially high-value items, you’ll want to make sure their replacement is covered under your homeowner’s insurance policy.
If everything is destroyed in a storm or a fire, you will want to make sure you are able to replace everything without having to spend too much money out of pocket.
Where You’ll Live if There’s an Emergency
If your house is destroyed in an emergency, where will you go? A homeowners insurance policy may include coverage called additional living expense insurance, which is for lodging and food while you aren’t able to live at home.
If your home will need to be completely rebuilt, it may be incredibly expensive to stay at a hotel for months to a year, but it is far more affordable when you have money from your homeowner’s insurance policy. They will cover these costs, so you don’t have to worry about the added expense.
Protection Against Liability
Liability can come into play if someone is injured on your property. This can happen if they’re there to help with household tasks if they’re visiting, or if they stop by for any other reason and end up being injured. If they are injured and it is discovered the injury is due to your negligence, you could end up liable for their medical and related costs.
Liability insurance helps protect you against this. If something does happen, having liability insurance can help save you thousands of dollars that might otherwise need to be paid to cover the injured person’s expenses.
Additional Endorsements or Riders
Depending on where you live and what items you own, there may be additional coverage that is important to have in your policy. Some of the additional endorsements or riders you may consider include the following.
- Item-Specific Coverage: You may need coverage for items like jewelry or paintings that have a high value. The additional coverage can provide funds for a replacement or repairs if these items are damaged, destroyed, or stolen.
- Flood Coverage: If you live in an area where floods are possible, it’s a good idea to have flood coverage. Damage from flooding isn’t typically covered under a homeowner’s insurance policy, so you’ll want to make sure you purchase additional coverage.
- Earthquake Coverage: In areas where earthquakes are possible, it’s a good idea to have earthquake coverage. If one does occur and you don’t have this coverage, you may be responsible for paying for any repairs out of pocket.
Additional Costs for Attractive Nuisance or Pets
There may be additional costs if you have items that are not allowed under the standard policy. Typically, these include items that are considered an attractive nuisance or something that can be dangerous for people who visit your home. Some examples include the following.
- Swimming Pool: A swimming pool may be considered an attractive nuisance and you may have a higher insurance cost as a result. This is due to the potential for children to wander onto the property and into the swimming pool, especially if there isn’t a fence around it. Some insurance companies will require pools to be fenced.
- Trampoline: Trampolines are considered an attractive nuisance as well and can raise your insurance rates because of the potential for anyone on it to be injured. Some insurance policies may have restrictions for trampolines.
- Dangerous Plants: If you have plants that are highly toxic, especially if they look edible or are near edible plants, you may be required to have them fenced or to pay a higher price for your insurance policy.
- Certain Dog Breeds or Dangerous Animals: The breed of dog you have can increase your insurance costs, too. Certain breeds are known for being potentially dangerous without proper training, so having one of these as a pet or other dangerous animals can cause your insurance rates to increase.
When you’re shopping for homeowner’s insurance, be sure to compare potential policies carefully so you know what’s included in the costs and what isn’t. Make sure you understand the common types of coverage in insurance policies and that you have a good idea of what you need before you start shopping around for the perfect policy.
