Picture this.
Family sitting around the kitchen table laughing about the events of the day.
Children running down the stairs on Christmas morning to see the gifts from Santa.
Friends gathered poolside, enjoying a Barbecue on a warm summer day.
Your dog playing fetch in the yard.
For many people, this is what dreams are made of. Often our greatest motivation is to protect and provide for our families.
And it begins with the decision to purchase a home. Maybe it’s a starter house or maybe it’s your forever home. In any case, home is the starting place of love, hope, dreams, and many memories to be made.
Buying a home is one of the most important decisions and greatest investments you will ever make. In the excitement of the buying process, it can be easy to overlook the risks you are taking on with the purchase of your new living space. Especially in today’s seller’s market where the number of available homes is scarce.
Before you finalize that purchase, you should first assess the risks that come with it and consult with an insurance professional who can help you effectively mitigate these risks.
But let’s be real—insurance isn’t everyone’s favorite topic. It can be complicated, costly, and just downright inconvenient.
Think of it this way, though. A homeowner’s insurance policy isn’t just designed to replace a house if the unexpected happens. It’s designed to protect your family, your children, your friends, and your dog; to protect what matters most; and to give peace of mind.
There’s a common misconception among home buyers that all home insurance policies are the same. In fact, we take many things into consideration when constructing a policy that is right for your needs.
As you search for your new home, remember that the physical characteristics of the house—its size, location, construction, and overall condition—can affect the cost, choice, and availability of home insurance. Here are some factors to consider when shopping for a home:
Houses that are located near highly rated, permanently staffed fire departments usually cost less to insure. This also holds true for homes that have a hydrant nearby.
A stately, older home can be quite beautiful, but ornate features like plaster walls, ceiling molding, and wooden floors may be costly to replace and can raise the cost of insurance. And plumbing and electrical systems can become unsafe with age and lack of maintenance. If you are considering buying an older home, find out how much it will cost to update these features and factor that into the cost of ownership.
A new roof matters to insurers and keeps you and your family safer. Make sure to check the roof’s condition. Depending on the type of roof and whether or not it’s made with fire- and/or hail-resistant materials, you may even qualify for an insurance discount.
Find out whether the house has been updated to comply with current building codes.
If the house has a swimming pool, hot tub, trampoline, or other special feature, you will likely need more liability insurance. You may also want to consider purchasing an umbrella liability policy to provide added protection in the event someone gets injured on your property and decides to sue you.
Damage from flooding is not covered by standard home insurance policies. If you are buying a home in an area at risk from flooding, you will need to purchase separate flood insurance, which is available from the federal government’s National Flood Insurance Program (NFIP) and from a few specialty insurers.
When we first begin constructing an insurance policy, we place a valuation on your home. In the current market, we’re seeing homes selling for far more than the asking price. If you pay more for a home than what it’s evaluated at, you risk not being fully compensated for the replacement cost.
You should also consider that the cost of labor and materials is likely to rise from the time you purchase your policy to a time when you need to make a claim. This means that the replacement cost stated in your policy may no longer be sufficient to fully replace your home in the future. We recommend revisiting your replacement cost periodically to make sure it is still going to provide the protection you need in case of an unexpected event.
Finally, personal liability coverage should play a significant role in your choice of coverage. Most home insurance policies include a personal liability component, but it’s important to confirm that you do in fact have the coverage for everything you need. Before purchasing a home, ensure that your policy will protect you if someone is injured on your property or someone does damage to your property. Your coverage should include amounts for legal expenses, medical bills, settlement costs, and death benefits.
All these risks should be discussed and mitigated with your insurance advisor prior to finalizing the purchase of your home. At GIS, we work with multiple top insurance carriers that can provide coverage for a variety of unique situations. This means we do the shopping for you, but the first step is for you to make us aware of the risks. If you’re looking for advice and resources on how to properly assess and protect your new home, connect with us. We want to share in the buying process with you so that we can be here when you need us most.
This article was published in the Spring 2021 issue of the General Insurance Services Risk & Business Magazine. Access the full publication here
Michelle joined GIS in April of 2018 specializing in personal insurance in our Valparaiso office. Michelle grew up in Valparaiso and graduated from VHS. She later graduated from Don Roberts Beauty School, and began a 17 year career in the beauty industry. She currently resides in Morgan Township with her high school sweetheart husband, Jordan, and two fun loving boys. In her free time Michelle enjoys volunteering at Valparaiso Nazarene Church, watching baseball, running and spending quality time with friends and family.
4/13/2021