When you purchase a new home, before you choose a paint color, landscape design or anything else – make sure you are purchasing a homeowner's insurance policy, but not just any policy. The policy you choose should be perfectly tailored for your own needs and the needs of the home. Without the right policy, you leave yourself vulnerable to expensive out of pocket costs. When choosing a new policy for your new home, there are a number of factors you want to consider to make sure you are choosing a policy wisely. Here are just two of them.
First, request a copy of a claims history report for the home. The claim history report offers a host of valuable information. There are a number of third-party companies that maintain these claim databases. Reviewing this report will highlight any past claims submitted for the property, such as for fire, flood, theft or even lightning strikes. Why is this information important? This report is important because it can give you a better idea of what type of coverage you need.
Take a home that has an extensive claims history for flooding, even though the property isn't located in a flood zone. The new homeowner hadn't considered a flood insurance add-on. After reviewing this report, they've changed their mind. Without this report, the new homeowner would not have known the potential for flooding. Without the coverage, they would have been under-insured and left to pay for damage on their own. Make sure you are reviewing the report first.
If this is not your first home purchase, don't simply roll-over your existing cover limits from your last home and think you will be protected. This type of mistake can be costly because it can leave you with too little or too much coverage. Determining how much coverage is necessary is a two-part process. Phase one involves the property. If the house were to be destroyed today, how much would it cost to rebuild it with similar materials and the same design?
This cost is not to be confused with purchase price of the home as these figures can be very different for a number of reasons. The second phase is the cost of your belongings. If you were to lose everything, how much would it cost to replace everything? These two figures will offer a starting point for the value of your policy.
If you're looking for a new insurance policy, an insurance broker can assist you. A broker can use their vast knowledge about homeowner's insurance policies, as well as their relationships with a number of insurance companies, to find the right policy for you.