During our last session, we discussed extensively on car insurance and why its very necessary to have your car insured. Today, we will be focusing on the one insurance you mustn’t skip when buying a [new] house.
Last spring’s coronavirus lockdowns drove millions of Americans to seek shelter indoors, bringing the whole economy to a standstill. The housing market also suffered as a result.
However, that delay was just momentary; by late May, demand for home purchases had risen sharply.
Consumers nationwide bought homes at historic rates. This resulted in the lowest levels of for-sale housing in history, as people desperately sought to escape more crowded urban areas and were quarantined in larger, more spacious homes.
The level of demand was so high that property prices also increased. The median sales price of a home in the United States for the third quarter of the year was $324,900. Additionally, the Federal Housing Finance Agency reports a 10% annual increase in prices.
That’s a rather steep price tag for the majority of individuals, and it’s probably the biggest purchase they’ll ever make. If you were one of the numerous people who bought a house during the COVID-19 outbreak (or plan to soon), make sure to adequately insure this significant investment with homeowners insurance.
The one insurance you mustn’t skip when buying a house is homeowners insurance
A sort of insurance policy known as “homeowners’ insurance” covers accidents that happen on your property. This also includes the damage to your home.
There are also many kinds of homeowner’s plans that provide coverage for damage. That is, damage caused by calamities like hurricanes, earthquakes, and more.
You can work with any insurance company or agency to buy homeowners insurance. Using Credible, you may simultaneously shop for and evaluate several insurance choices.
Homeowners insurance is frequently required. Your lender will undoubtedly demand a policy before you close on the house. That is, if you utilized a mortgage loan to buy the property.
This is to guarantee that if you default on your payments, the lender will always be able to recover their money.
But more than this, having homeowners insurance is a method to safeguard your financial security and your investment in case the unexpected occurs.
Your insurance can cover the cost of repairing or fixing the issue if your home is damaged, burglarized, vandalized, or if someone is harmed on the property, reducing the financial strain it places on your family.
Home ownership is typically the biggest investment a person will ever make, according to Sylvester Mathis, chief insurance officer at Insurity.
“Most Americans couldn’t afford to replace their homes in the event of a total loss if they didn’t have homeowners insurance. That has a very high danger. “With homeowners insurance, the homeowner passes their financial risk to the insurance provider.”
Recommended: How to choose the right car insurance policy
What homeowners insurance covers
Homeowners insurance generally covers three categories:
- The actual house
- personal belongings you retain at home
- the residents and visitors to the building
According to Mathis, “your most fundamental homeowner plans cover damage to the house caused by fire, vandalism, hurricane, lightning, or other expressly covered calamities.”
Theft-related loss or damage to personal property is also covered by homeowner policies.
You can typically acquire additional coverage to make sure high-value possessions like jewelry, artwork, musical instruments, or collectibles are secured as well.
According to Mathis, to safeguard the insured homeowner in the event that someone is injured on their property, policies also provide liability coverage up to certain limits.
“Homeowners insurance compensates for expenditures if someone sues the homeowner in addition to the liability coverage.”
In order to cover damage from these occurrences, homeowners who reside in locations vulnerable to earthquakes or flooding may need to acquire different policies.
In fact, before you can buy your home, your mortgage lender may require that you get earthquake or flood insurance.
Compare prices and coverage for homeowners insurance.
You must first decide what coverage you’ll require in order to purchase the appropriate policy. According to Mathis, this entails evaluating your own property (and its value) as well as your level of risk. It’s crucial to know what kind of deductible you can pay.
Once you’ve determined which policy is ideal for you, Mathis advised comparison shopping, making a list of similar plans, or asking an agent or broker to give at least three policies for comparison.
Finally, avoid signing up based simply on pricing, because doing so can end up costing more in the long run.