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First-Time Home Buyer: What to Know About Home Insurance

Buying a home as a first-timer can be exciting. But don't get carried away yet. There are still many crucial decisions to make, one of which is buying the right home insurance policy. This post explores what you should know about home insurance as a first-time home buyer so you can navigate the world of home insurance like a pro. But first:



Do I need home insurance to buy a home?

If you're taking out a mortgage, the lender often requires you to buy a home insurance policy.


They have a right to the property until you pay off the debt on the house, so it's in their best interest to protect the property before you assume complete ownership.

Even if you are paying cash outright, buying home insurance protects what is likely your most significant investment.


What home insurance includes

Standard home insurance typically covers the structure of your home and other attached structures, such as a garage, fence, or shed. It also provides coverage for electronics, furniture, and other personal belongings.


Home insurance also pays your legal fees if someone sues you for getting injured on your property. It also pays their cost of medical care. When you can't live in your home temporarily because of a covered event, home insurance can pay your accommodation and living expenses.


Factors that determine home insurance costs

How much you'll pay for your first home insurance depends on several parameters, such as your state of residence. For example, the average annual cost for $250,000 in dwelling and liability coverage is $5,317 in Oklahoma compared to $2,027 in Wisconsin.


Also, the higher the value of your home, the higher the cost of home insurance. Another factor is the deductible. If you choose a higher deductible, you'll pay a lower premium. Other parameters include how often you make a claim, marital status, and age.


Understanding these factors can help you reduce costs and make the right decision that suits your needs and budget.


Picking a coverage limit

Your dwelling coverage limit should be based on the replacement cost of your home and not its market value. If your house is destroyed, a market-value-based policy may not be able to cover the cost of rebuilding it.


Insurers will often estimate the replacement cost by checking public information. But ensure this information is correct by researching local building costs or speaking with a local contractor. This will ensure that your insurer pays enough money to rebuild your home in the event of a loss.


Getting competitive rates

You can pay lower home insurance rates by taking advantage of discounts offered by insurance companies. For example, bundling your auto and home insurance will help you save on premiums.


In addition, don't reach out to a single insurance company and settle for their quote - you may discover better deals for the same level of coverage when you get quotes from multiple insurers.


Gaps in coverage

Standard home insurance policies have exclusions. For example, typical home insurance policies do not cover floods, earthquakes, or sewer backups. If you anticipate events or situations that a policy does not cover, it's best to consider additional coverage, such as flood insurance.


Also, there may be coverage limitations on high-value items such as jewelry. Read the policy's exclusions and limitations carefully and fill in gaps appropriately.


Talk to a Wisconsin home insurance expert

A local Wisconsin home insurance expert can review your personal situation and home factors to get favorable quotes from top insurance companies.


Your WI insurance agent will also point out the exclusions and limitations in the policy and recommend optional coverage. They will work with you to take advantage of discounts so you can save on rates while getting maximum protection for your investment. Speak with an agent today.

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