Don’t forget home insurance costs when home buying

It’s easy to get caught up in the “how much house can I afford” game when you begin your quest to become a homeowner. But don’t forget to factor in the cost of things like property taxes and homeowner’s insurance when purchasing a new home.

On a home valued at $230,000, you can expect to pay $300-$1,500 per year in certain states for insurance; this is in addition to your mortgage payment and taxes. The same $230,000 home could cost over $5,000 annually to insure if it’s on the coast and at high risk for tsunami, loan provisions potentially require mandatory flood insurance. Homeowner’s insurance costs vary greatly from state to state, with the average policy running at around $800 annually.

Be sure to keep that in mind as you shop, and make sure you get multiple quotes from different providers, just as you would a mortgage. As an independent agency, we are appointed with several top rated carriers and can do the insurance shopping for you. Typically, homeowner’s insurance costs are overlooked as borrowers focus on the bigger things like the mortgage.

So what are you getting for the money anyways? The standard homeowner’s insurance policy is separated into two basic categories of coverage: property and liability. These two categories are further broken down into six separate types of coverage. Many more options or additions can be purchased if necessary.

PROPERTY COVERAGE

  1. Coverage A – This covers your “dwelling” or the actual house. You want to insure your house for it’s full value at “replacement cost.” Settle for nothing less.
  2. Coverage B – “Other Structures” insures structures not attached to your home. Picture a detached garage or a shed, which can be connected by a fence or utility line. On most policies, you will be insured for 10% of your coverage “A” amount. If your house is insured for $200,000, your shed is insured for an additional $20,000.
  3. Coverage C – Personal Property or contents. This is your “stuff.” On most policies, you are insured for 50% of coverage “A” under this section (in addition to the “A” and “B” limits, totaling $320,000 for property damage on your policy. This concept is known as “stacking” coverage.
  4. Coverage D – Loss of Use. Loss of use coverage will pay your additional living expenses in the event your home is deemed unlivable as a result of a covered claim (a fire for example). On most policies, if your normal living expenses are $1,500 per month and they are increased to $2,200 per month as a result of your house burning down, the insurance company will pay ONLY the $700 difference until your house is repaired or you have found new living quarters, whichever occurs first.

LIABILITY COVERAGE

  1. Coverage E – Personal Liability. Your insurance company will pay up to the policy limits for damages you’re liable for. Picture someone slipping on your icy driveway and injuring themselves then sueing you for neglegence.
  2. Coverage F – Medical Payments to Others – This coverage is intended to keep you from being sued. Perhaps your dog bites the neighbor’s kid. This coverage will pay for resulting medical bills without having to prove “fault.” It is good will gesture coverage for when accidents happen. Of course, if your neighbor is not satisfied, they retain the option to sue you.

Always secure the reliable protection that will leave your home and belongings safe. Get started on your home insurance policy that will protect your future and finances – Call us today!

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