Buying a home whether it’s your fifth or your first, is an exciting and stressful time. After choosing a realtor, researching the area and going on (what seems like) a million showings you have found a house that you love, it’s in a great neighborhood, and you’re ready to make an offer. You pace around and bite your nails waiting on the counter offer. Finally, you have come to terms with the seller and you are officially under contract on your new home! Now what? Your bank or your mortgage broker will eventually ask you about your homeowners insurance. If you have never owned a home before, this may get tricky.
Here are my best pieces of advice to help you through this process:
1. Use an independent insurance agent (like us!). Independent agents have access to a lot of different insurance companies. We can provide several quotes in order to find the best coverage and price! This is great news for you as homeowners insurance premiums rise. We are also more of an advisor to you than a salesperson. Getting to know you is our number one priority. We want to be with you for the long run so working with us means you will always talk to one of us, not an automated machine.
2. Now you have an agent! The next step will be for you to talk with your agent so they can gather the appropriate information from you to quote your homeowners insurance. They will ask questions like your birthdates, the construction on the home, square footage, if you will be making any immediate changes (like with kitchens and bathrooms), if you have an alarm system (discount!), etc.
3. TIP: In North Carolina, most insurance companies require an auto policy with the homeowners policy. This only benefits you as a multi-policy discount = big savings!
4. Once you receive the quotes here are things to look for in your policy:
a. The dwelling limit/Coverage A refers the cost to rebuild the home as is. Make sure you are comfortable with that limit.
b. The higher the deductible, the lower the premium. Choose a deductible that you will feel comfortable paying out of pocket in the event of a claim. Most common are $500 and $1,000.
c. Personal liability is inexpensive and very important. Have at least $500,000 of personal liability and be sure to include personal injury and identity theft coverage.
d. Important Extras to look for: Additional insurance for the dwelling, replacement cost on your contents, water/sewer backup.
e. Flood and earthquake coverage are not included in homeowners insurance policies. Flood can be purchased in addition to and earthquake can be added on for an additional premium.
5. The next step will be signing an application with your agent. Once that is completed, your agent will handle sending the appropriate documents to your bank/mortgage broker and closing attorney.
6. What about the premium, you say? Well, most of the time your insurance premium and property taxes are included in your monthly mortgage payment. Therefore your insurance premium will typically be part of the money you pay at closing.
Congrats on your new home!