Tips for New Home Buyers: Navigating Insurance

Buying a home is an exciting milestone, but it comes with important considerations to protect your investment. Insurance is one of the most critical aspects to address. Below are concise tips, common mistakes to avoid, and key questions to ask when buying your home:

Mistakes to Avoid

• Overlooking the Roof’s Condition: Roofs older than 10 years can significantly increase premiums, and some carriers may not cover them. Ask about the roof’s age, materials, and documentation of updates. Consider repair or replacement costs.
• The Cheapest Price Isn’t Always Best: While saving money is important, choosing the cheapest insurance can leave you underinsured. Check if your policy offers Actual Cash Value (ACV) or Replacement Cost Value (RCV) coverage—the difference can significantly impact your payout in a claim.

• Skipping a Home Inspection: Inspections uncover issues like outdated wiring or plumbing that may affect insurability. Older homes may need updates to qualify for standard policies.
• Assuming Flood Insurance Is Included: Homeowners insurance doesn’t cover flood damage. If in a flood-prone area, you’ll need a separate policy.

Things to Consider When Buying a Home

• Roof Condition: What is the roof’s age and material? For example, does it have wood shakes, asphalt shingles, metal, or tile? Different roof types impact premiums, with wood shake roofs often being harder to insure.

• Systems Updates: Have plumbing and electrical wiring been updated? If so, when?
• Basements: If finished, consider water backup coverage or flood insurance.
• Mountain Properties: Ask about wildfire mitigation efforts, insurance challenges, and the seller’s insurance history. Tip: Check local Facebook or Nextdoor groups for insights into coverage challenges.
• Replacement Value: Ensure the insurance replacement value aligns with rebuild costs (not the land value or purchase price of the home).

Tips to Save on Insurance

• Bundle Policies: Combining home and auto insurance can save money.
• Choose the Right Liability Limits: Raise auto liability limits or add an umbrella policy to protect your assets.

Additional Tips for New Buyers

• Understand Exclusions: Review exclusions like earthquakes or mold. If in an earthquake-prone area, consider a separate policy.
• Personal Property Coverage: Confirm belongings are covered for replacement cost, not depreciated value. Take an inventory.
• Home Security Discounts: Install security systems or detectors to qualify for discounts.
• Deductibles: Opt for a deductible you can afford. Check for separate wind/hail deductibles.
• Specialty Coverage: Add riders for high-value items or home-based businesses.
• Loss of Use Coverage: Ensure limits cover living expenses if the home becomes uninhabitable.
• Pools/Trampolines: Verify if these affect liability coverage.
• Claim History: Request the seller’s CLUE report to uncover past claims.
• New Build Discounts: Inform your broker of updates to systems like HVAC or plumbing.
• Closing Costs: Budget for prepaying a year’s insurance premiums at closing.

Special Considerations

• Mountain Properties: Homes in wildfire-prone areas may be harder to insure. Verify fire mitigation efforts and reach out to a broker early.
• Finished Basements: Add water backup coverage for finished basements prone to damage or even flood insurance.

Partnering With an Insurance Broker

Buying a home involves extensive paperwork. Partnering with an insurance broker ensures:

• Time and stress savings.
• Prompt delivery of required paperwork to lenders.
• Policies tailored to meet loan requirements.

Protecting Your Investment

• Review auto insurance liability limits to align with your responsibilities.
• Consider an umbrella policy for added liability protection.
• Schedule annual insurance reviews to adjust coverage as needed.

Owning a home is a significant achievement. By understanding insurance basics and working with a trusted broker, you can protect your investment and enjoy peace of mind.

Protect your new home with the right coverage from The Mitchell Insurance Group. Click here to get a personalized insurance quote today!