Vital Insurance Tips for New Homeowners
If you’re looking to purchase your first home that’s great news. You likely have that feeling of excitement that borders on being overwhelmed by the experience. Don’t worry, as a new homeowner that’s typical and completely expected! One of the bigger fears you might be facing is forgetting something as you go through the process. Great news – this little mini guide is going to provide some guidance for you and make insurance easy for you.
Do Your Insurance Work at Least a Month Ahead of Time
I can’t tell you how many times a client calls telling me, “Hey, listen, I’m supposed to be closing tomorrow but I don’t have insurance yet”. Ouch! While I can put a policy together in 10 minutes if you’re in a bind, I prefer to have time to dig deep for any discounts. If you don’t line this up earlier than later, you’re going to force somebody to rush your home policy and it might cost you.
Besides getting the best price for your home insurance, doing your homework early will ensure your mortgage company has the clear to close. If your mortgage underwriter doesn’t have this on file your closing could be delayed at the last minute. I want you to have the easiest closing possible – so please do this early.
If you’re working with a professional, they’ll actually do 99% of the work for you on this. In our agency we do almost all of the work for new homeowners, and we interface with the mortgage company to ensure they have everything they need. This leaves no paperwork for you to handle!
Update your Discounts
If you’re a new homeowner, you’re getting access to the biggest discount available. Up until now you’ve been paying 15-30% more for your insurance. The discount we are talking about is the bundling discount for having home insurance and auto insurance together. If you were renting previously, good job. The good news is that the discount for owning a home and bundling that is even more than renting… so make sure you review this!
To Escrow or not to Escrow
That is the question! Okay, humor aside, this is actually a pretty big deal. The reason being is that if your insurance is set up through escrow you qualify for a hefty discount. This is because insurance companies spend a lot of time chasing down clients that are late to pay. When your insurance is paid through your escrow they pay for you – so you get a discount! If your company doesn’t offer this, give us a call at (630) 225-9325 so we can help.
Now, if you’re doing escrow, you also possibly have the option of having your insurance paid in closing costs. For many new homeowners looking to reduce their upfront costs, this $700-$1,500 can be important. Ask your mortgage agent if you can pay insurance at closing, or just let us help.
If you have any questions or need assistance with insurance for your first home purchase, please give us a call at (630) 225-9325 so we can assist and make this easy for you.
Congratulations and good luck!
The reality of it is that all insurance companies aren’t the same – and when you’re protecting what is likely your most expensive and valuable asset (your home), you can’t afford to make a mistake. Now, what I can promise you with our agency is:
- A fully customized home insurance policy that is designed to meet your needs and specifically protect you.
- Affordable rates with a seasoned team that knows how to keep you within budget.
- Regular policy reviews to make sure your policies match your changing needs.
- Customer service from an agency that ranks 20% higher than industry norm on customer satisfaction surveys.
- A risk review that lets you know your risks, and lets you determine what matters most.
The reality is that most people are only content with their home insurance policy because they’ve continuously lowered the bar for their insurance company. I know, I did it too… and I still do with my cable company and others. You don’t have to continue with that. You don’t have to overpay for poor service and coverage that isn’t designed for you.
How Can I Save Money on my Home Insurance?
It is vital that your home insurance policy contains the appropriate amount of coverage for your family. Saving a little money today cutting coverage is not worth it if you’re going to lose hundreds of dollars later. A good agent will ask questions about what you own to help make sure you are not over-insured or under-insured.
Coverage Reduction: If you have no separate structures on your property such as a fence, workshop, or detached garage, try asking your agent to reduce or remove that coverage to reduce your premium. You may also want to reduce the personal property percentage if the replacement cost of your belongings is lower than the suggested limit. Establish an estimated value of your contents before calling for a quote and ask the agent to reflect that limit in your quote. Changing your contents limit from 70% to 35% could save you valuable premium dollars on your policy.
Claim Forgiveness: Some companies provide a feature that promises not to raise your rate in the event of a claim. Often this feature is nominal in price and can save you hundreds of dollars in the future if you were to have a claim.
Safety Features: When getting a quote, always tell your agent that you have smoke alarms, deadbolts, and fire extinguishers to get the basic safety device discounts (they rarely ask for proof). Consider having a central alarm system installed to warn against fire and burglary. Not only will you sleep better at night, you will save about 15-20% on your annual premium.
New Roof: If the home you are purchasing has a roof that is less than 7 years old, this could qualify you for a significant discount on your home insurance policy. If the roof of your new home is in need of replacement, be sure to tell your insurance agent so they can help you get this discount.
Multiple Policy Bundling: Whenever possible and practical, insure your auto and homeowner business with the same company. This typically results in additional discounts on both policies which can amount to at least 10% of the premium.
Payment Preferences: Ask your agent which form of payment is the most cost effective. Paying the home insurance annual premium in full, or signed up for automatic billing, can be less expensive and more convenient than the old-fashioned way of writing a check to your insurance agent.
How Do I Know Which Insurance Agent to Choose?
Having good insurance is crucial as you work to protect your family from life’s risks. However, your insurance company can only do so much to help you. It is vital to find an agent who you trust to give you professional advice and personal service. Insurance policies are not apples to apples and professional experience and advice is necessary to make sure you don’t have any gaps in coverage. You will also be spending your valuable time managing your policies when it comes to billing, adding a new car, adding a team driver, etc. Having an agent who provides seamless service during those life events is very valuable, and it does not cost more than going through a call center.
A good insurance agent will spend time with you to get to know your family and your unique risks. Be wary of agents that promise a quote in 15 minutes or less because it takes time to make sure you are not over-insured, under-insured, or missing any discounts. Ask your agent if the company they represent offers any kind of claim forgiveness and what to expect if you were to have a claim. Also, ask how often you can expect to have your policy reviewed. Your needs will change over time and a good agent will have a process in place to ensure they review your policy at least once or twice a year.
How Does the Coverage Work on My Home Insurance?
Coverage provided can change based on which company you choose to insure your new home. Here is a recap of some of the most common coverages that will protect your home:
Dwelling- this is the maximum amount the insurance company will pay to rebuild the structure of your home in the event of a total loss. Do not be surprised if this amount is higher or lower than your market value. Sometimes, the cost of labor and materials to rebuild your home varies from the current market value.
Other Structures- this covers separate structures on your property that are not attached to your house. For example, if you have a fence, detached garage, pool, gazebo, etc. be sure to let your agent know.
Personal Property– this covers your personal belongings inside the house that are not built into the structure of the house. For example, this includes things like your furniture, electronics, and clothing. If you own any special items like a musical instrument, expensive art piece, or jewelry, let your agent know so they can help you schedule that item.
Scheduled Personal Property– home insurance policies typically limit how much they will cover certain items if they are stolen. For example, your home insurance policy might only provide $1,000 or $2,500 if you have a piece of jewelry that is stolen. If you own things like jewelry, musical instruments, art pieces, etc. you may need to schedule the item on your policy in order to receive coverage for the full amount after a theft.
Personal Liability- this is one of the most important coverages that you can have because it helps protect your from lawsuits. If you are held liable for someone’s injuries, your insurance company can help pay for their injuries, preventing you from being sued. Ask your agent to help you determine how much personal liability you need on your insurance policies. You may also need an Umbrella policy, which provides additional liability coverage.
Medical Payments- if a guest is injured in your home this helps to remediate the situation, hopefully preventing a lawsuit.
Loss of Use- sometimes the damage from a claim is so bad that you cannot safely live in the house. For example, if a kitchen fire were to leave smoke damage behind it might not be safe to live in the home until the damage is repaired. This coverage helps pay your additional living expenses while you stay in a hotel or apartment.
Water Backup- if your sewer backs up or if your sump-pump overflows, this water damage would not be covered by a typical home owner’s policy. You would need Water Backup coverage added to the policy in order to cover damage from your sewer backing up or the sump pump overflowing.
Building Codes– insurance is designed to help restore you to the place you were before the damage occurred. For example, if a hail storm damages your roof, your home insurance should give you the money you would need to replace the kind of roof you had before. However, home insurance is not designed to give you a better or more expensive item than what you owned before the loss. Sometimes your local ordinances or laws will require that you make an update to your home, like adding an ice dam to the roof in order to be up to code. This coverage would pay you additional money to help you get back up to code after you experience a claim.
Dealing with home insurance can be overwhelming when you’re trying to close on a home. It’s also difficult to navigate the myths that our floating around about your home insurance. Here are some common mistakes that you can avoid to make sure you have the best protection possible for your family:
- If the Dwelling Coverage amount on your home insurance policy is higher than your market value, don’t let this scare you. Reducing your Dwelling Coverage too far is risky because it is one of the biggest assets you will own in your lifetime.
- Carrying too little liability coverage is common, and dangerous. These days, people are happy to sue and we live in a very litigious society. It is possible to lose the assets that you have worked for all your life in a lawsuit.
- Sacrificing quality for price. Your insurance premium are one of the biggest expenses you have as a homeowner. It can be tempting to try to find the cheapest coverage possible. It is important to make sure you receive every discount that you qualify for, and it is important not to pay for coverage that you won’t need. However, going with quality is going to save you money in the long term every time, and we want to help you do that.
Call us today so we can help – it’ll be our pleasure to get YOU protected the way you need to be. Call the Allstate insurance experts from Eggar Insurance, at (630) 225-9325 today, or enter your information right here and we’ll set up a phone appointment with you.
Courtesy of Katlyn Eggar – Insurance Agency Owner