What You Need to Know About Home Insurance Before Buying a Property

One of the things that you'll spend a lot of time thinking about when you're purchasing a home is homeowners insurance. Homeowners insurance helps protect property owners from damage to their possessions and property in the event of an incident like a fire or break-in. How much does home insurance cost? Knowing what to buy, when to buy and what kind of coverage is right for you can help you through the home buying process.

Is It Required?

Homeowners insurance is not required by law, but it will be required by your mortgage lender if you have to borrow money for a home. Before your lender will grant the loan, you'll need to produce proof of purchase of home insurance. Once you've made an offer on a property, start contacting homeowners insurance companies to get quotes. This way you'll be ready when the purchase is being finalized.

If you are paying cash for your property, you are not required to have homeowners insurance. However, homeowners insurance can help protect your property in the event of a disaster. Since your home is an investment, homeowners insurance is a smart way to protect your investment.

What Does It Cover?

What does home insurance cover? Every policy is different in what it covers, so read yours carefully before signing on the dotted line. "How much home insurance do I need?" In general, there are two types of homeowners insurance policies: basic, and comprehensive. Comprehensive insurance covers all types of damage except what is specifically excluded in the policy. Basic insurance only covers perils that are specifically mentioned in the policy. Homeowners can choose either type of policy, but must ensure their policy is acceptable to the mortgage company if they are borrowing money to buy their home.

It's typical for a policy to cover damage from fire, lightning, riots, explosions, air craft collisions, vandalism and burglary, but this all depends on what type of policy you buy. In addition, many policies offer personal liability coverage. This type of coverage protects the homeowner if someone is injured on the property and decides to sue.

In addition, homeowners may also purchase optional insurance. Optional homeowners insurance can cover damage like sewer backup or earthquakes. Hillcrest homeowners may decide on a case by case basis whether or not to purchase this type of insurance based on whether or not they feel they are at risk for these problems.

Can A Property Be Uninsurable?

Certain types of defects can make a property difficult to insure. Sometimes, a No Frills policy is most appropriate for these properties. No Frills policies offer some basic types of coverage, but these policies also require the homeowner to assume a higher level of risk. Homeowners who want a more comprehensive type of policy can make improvements to their home to qualify for better coverage.

How Can You Save Money?

You can save money on your homeowners insurance policy by shopping around for the best deal. Give yourself time to contact several insurance companies during the home buying process. Sometimes making home upgrades can reduce the cost of insurance, and often insurance companies will offer a discount to homeowners who increase their deductible. Ask insurance companies what you can do to reduce the cost of your insurance.