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 Homework at Least a Month Ahead of Time
We often get a call from a client in a slight panic saying this. “Hey, listen, I’m closing on new home tomorrow, but I don’t have insurance yet”. Of course, I can put a policy together in 10 minutes if you’re in a bind. However, I prefer to have to time to dig deep for any discounts and understand their needs. If you line this up earlier rather than your agent won’t be rushed and it could save you valuable dollars. This also helps if your closing date gets moved up unexpectedly.
In addition to 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. Home closings are stressful and I want you to have the smoothest closing possible.
If you’re working with a professional, they’ll do 99% of the work for you. In our agency we do almost all of the work for new homeowners. We interface with the mortgage company to ensure they have everything they need promptly. This takes the burden off of you!
Update your Discounts!!
If you were renting and now you’re a new homeowner there is great news. You could now be eligible for the biggest discount available. This discount could be 15 - 30% of your insurance premium. The discount I’m speaking of is the bundling discount for having home insurance and auto insurance together. If you had renter’s insurance previously, wonderful! But, the good news is, that the discount for insuring your auto and your home (bundling) is even better than the bundling with renters insurance and auto.
To Escrow or not to Escrow
That is the question! Shakespeare aside this is an important decision. If your insurance is set up through escrow you qualify for a hefty discount. Why? Because insurance companies spend a lot of time and resources billing clients and taking payments. When your insurance is paid through your escrow account the bank pays the insurance through this account regularly making the transaction seamless for you. So, our insurance company passes that savings on to you through a discount on your premium! If your company doesn’t offer this, give us a call at (630) 225-9325 so we can help.
Now, if you’re escrowing, you probably have the option of having your insurance paid during the closing. For many new homeowners looking to reduce any immediate out of pocket costs, this $700-$1,500 can be important. So be sure to ask your mortgage agent if you have the option to pay insurance at closing. We will be happy to assist you with this.
If you have any questions, concerns or need assistance with insurance for your first home purchase, please give us a call at (630) 225-9325 so we may assist you and make obtaining your insurance 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.
- Annual 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.
- An agency owner with a Certified Financial Planner® designation and 30+ years of financial planning experience. We can help with life insurance, retirement planning, and wide range investment guidance.
Don’t be content with only a home insurance policy because you have continuously lowered the bar for your insurance company. You don’t have to overpay for poor service and coverage that isn’t tailored for you.
How Can I Save Money on my Home Insurance?
It is vital that your home insurance policy contains the appropriate amount of liability coverage for your family. Saving a little money today cutting coverage is not worth it if you’re going to lose hundreds or thousands 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% if appropriate saves valuable premium dollars on your policy.
Claim Forgiveness: Our company provides 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. 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 needs replacing, and you replace it, 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 signing up for automatic billing, can be less expensive and more convenient than yester-year’s way of writing a check to the insurance company.
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. Finding an agent you can trust, is vital, to giving you professional advice and personal service. Insurance policies are not all alike 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 extremely 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 you 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. 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 could be risky because your home is one of the biggest assets you will own in your lifetime and if an unfortunate event occurs, not having enough to replace the structure would just be even more tragic.
- 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 hard for all your life in a single lawsuit.
- Sacrificing quality for price is not a good idea. Your insurance premium is one of the bigger and most important expenses you have as a homeowner. It’s tempting to accept the lowest priced insurance possible. Also, it is important to make sure you receive every discount that you qualify for. But when it comes down to it is important not to pay for coverage that you won’t need. Just know that going with quality insurance company and agency is going to help you to save your money in the long run every time! We want to help you save money and get the quality service you need and deserve.
Call us today – it’s our pleasure to help protect YOU and your loved ones. We are your insurance experts and we want to serve you here at the Knox Allstate Insurance Agency, please call (630) 225-9325 today, or enter your information right here and we’ll set up an appointment with you.
Courtesy of Darryl J. Knox Sr. CFP® - Agency Owner