One of the most costly home buyer debacles to avoid is not getting the right property insurance. We tend to associate insurance with negative events, medical bills, car accidents, and so on. But, it’s really about the transfer of risk. After all, if you have a huge pile of cash, you would self-insure as much as possible. That’s simply not the case for the vast majority of homeowners. So, you need homeowners insurance and needing it means understanding the most important things about it.
5 Important Things to Know about Homeowners Insurance
As a first-time home buyer (or even someone who has been through the process before), there’s quite a bit you’ll experience. You need to know about home inspections, appraisals, the final walk-through, and more. This also includes homeowners insurance. The fact of the matter is, some lenders require purchasing homeowners insurance as a condition of approving mortgages. Lenders likewise place more requirements on buyers, such as a down payment, creditworthiness, and so on.
“Whether you’ve just begun searching for a new place or you’re waiting to close on your dream home, one important aspect of moving you can’t ignore is insuring your investment. Enter the homeowner’s best friend: the homeowners insurance policy. Just like any other kind of insurance, there’s no such thing as a one-size-fits-all policy. Home insurance policy costs typically depend on the home’s location and age, the size of the deductible, and the coverage level.” —Realtor.com
What complicates this quite dull topic is there is so much misinformation about. A lot of what you’ve probably heard is truth mixed with conjecture and/or anecdotal situations. Of course, there are plenty of hard and fast truths about homeowners insurance but because this isn’t a focal point of our everyday lives, it’s more of a mystery. What’s more, insurance policies are confusing — just grab a copy of your health insurance, it’s not exactly crystal clear. Here are the five most important things to know about homeowners insurance:
- What homeowners insurance does cover. Your property and possessions are covered in the event of a fire, theft, vandalism, or inclement weather. Additionally, if something is stolen from your vehicle, your auto insurance probably won’t cover it, but your homeowners insurance will likely cover it.
- What homeowners insurance does not cover. Here in Florida, there are a few things homeowners insurance won’t cover. Sinkholes are one example, as is flooding (which is why flood insurance is so highly recommended). Water damage coming from above is generally covered (like a burst pipe) but water from below generally is not (sewer backup and flooding).
- Taking preventative measures helps you save money. Working smoke detectors, carbon monoxide detectors, security systems, pool fences all constitute preventative measures and having these installed will help to lower your premium. You can save even more money by bundling your policies but do not buy more types of insurance just to save a few dollars.
- Maintaining your home does matter. Keeping your home’s systems and components maintained and early problem detection are also important. For instance, if the central heat and air system is ten years old or older, having it inspected is a smart move. Your homeowners insurance might cover the replacement cost.
- Don’t assume filing a claim is futile. Speaking of replacement costs, it’s just plain wrong to assume your homeowners insurance won’t pay out a claim and therefore, it’s a waste of time to even file a claim. Consult your insurance agent when something occurs and ask if it’s fully or partially covered — you might well be surprised by the answer.
If you are considering buying a house in Orlando’s Hunter’s Creek, or another community, contact us for the latest market information. We are local and experienced in all facets of residential real estate, here to help you, when you need it.