Insurance FAQs for First Time Home Buyers

First Time Home Buyers

Buying your first home is stressful and complicated enough on its own, but then you discover that you have to have homeowners insurance lined up as well. Ideally, your real estate agent has been preparing you for this all along, but even they can’t give you all the details of what your policy should look like. Here are a few frequently asked questions from a first time home buyer that will help you secure your policy before going to closing:

How Much Will This Insurance Cost?

In most cases, you will need to bring the money for your insurance policy to the closing table. As such, it is important to be prepared for the cost as far ahead of time as possible. The cost of your individual policy will vary depending on the location of the house, size of the house, construction materials, and your insurance history. In general, your homeowner’s insurance will cost between $800-2000 per year. That may seem like a wide range, but there are so many factors that affect your cost it is hard to predict until you get quotes.

How Should I Buy Homeowner’s Insurance?

As with car or renter’s insurance, your best bet is always to get 3-5 quotes before you buy. You may be shocked to discover that the prices you get can vary by up to $500 per year, or that some insurance companies do not offer coverage for homes like yours. Gathering quotes as soon as you have a house under contract will give you plenty of time to shop around and compare coverage.

What does Homeowner’s Insurance Cover?

Homeowner’s insurance covers four main categories of financial damage. First, if your home is damaged or destroyed by fire or weather events beyond your control, your insurance policy will pay the replacement cost of the structure itself. Secondly, your insurance policy also covers your belongings inside of the house. This will help you get new furniture and appliances once the house is repaired or replaced. Third, your policy will also help cover any living expenses associated with the damage to your home. For instance, if you can no longer live in your home due to the damage, your policy will take care of your hotel, some food, transportation and more. Finally, your policy also offers liability coverage. This coverage comes into play whenever someone is injured on your property where you could be held liable for their medical costs or other damages.

What Isn’t Covered?

As a first time home buyer, it’s also important to know what isn’t included in your policy. The two biggest exclusions are flood damage and personal collections. Most insurance companies require you to carry a separate flood policy if your home is in an area known for flooding. As for personal collections of jewelry, instruments or artwork, you will need a separate policy and appraisals for those items as well. Injuries caused by pools, trampolines or pets may also be excluded in some policies, so it is always important to ask your insurance agent about these items before you buy.

Now that you understand homeowner’s insurance policies a little better, you are well on your way to becoming a successful first time home buyer. Just remember that you should never put off your insurance shopping to the last minute. Your lender will require you to have a policy in place in order for you to sign at closing. To learn more, contact Whitworth Builders today and speak with our agents about insuring your house in Florida.