Owning a home is a matter of great pride and joy for all of us. But homeownership also brings with it a great deal of responsibility. No matter how well-prepared and how cautious you might be, it is likely that your home will require some renovation or refurbishment at some point.
It's therefore a sound idea to purchase home insurance as soon as you buy the house, and guard yourself against any of the dangers that can possibly affect the health of your home.
It's important to remember when buying insurance for your new home that home insurance policies need to be customised - you need to know what kind of coverage you need. For instance, if you live in a neighbourhood prone to theft or prone to natural disasters, you may want to check the limits on the coverage offered for various adverse incidents. As a homeowner, you should have researched the locality before buying a home. Still, we live in times when extreme weather events are becoming more unpredictable and more destructive. Every possible precaution thus becomes a necessity.
How to get home insurance?
Purchasing home insurance requires a certain degree of prior awareness regarding your home and its surroundings.
The process of finalising the right kind of insurance also requires understanding some of the industry’s jargon. In the Internet age, both of these tasks can be handled by your favourite search engine. Once you are sure of how much insurance coverage you require for your home, and if you will also need insurance for your possessions, you can compare home insurance quotes online as well.
If you feel somewhat intimidated by the process, given how many choices need to be made, you should consider having a conversation with one or two insurers before confirming your purchase decision. If that doesn't help much and you're still unsure, your lender might have suggestions on which insurer might provide the necessary coverage. Another option is to check with friends in the neighbourhood about their experiences with insurers.
Remember: it's important to get a home insurance policy that offers adequate coverage for your new home; taking pains to get it right will prove worthwhile in the long run.
How much home insurance do I need to buy?
The question of how much coverage is adequate is not easy to answer definitively, but you can work out a reasonable estimate.
The foremost concern is the monetary value of your house and the expense that might be incurred at a future date if repairs or renovation become essential. The two types of home insurance coverage both require you to estimate the cost of “replacing” your house, which is the amount needed to rebuild your house entirely if such a situation should arise.
However, the first type, insurance for total replacement cost, allows you to work with the actual cost of reconstruction while the latter type, insurance for a fixed sum, requires the insurer to compensate the maximum amount estimated beforehand.
Choosing between the two options is essentially a choice between adequate coverage and the risk of remaining underinsured. Insurance providers will be looking to negotiate coverage within tightly defined limits and exclusions.
You will ideally need to account for possible discounting of the coverage, as well, and therefore should consider buying insurance that offers coverage as close to the full value of your house.
Also keep in mind that, if you need to rebuild your home, you will have to pay some percentage of the cost on your own. The costs incurred should ideally not eat into all your savings over and above what your insurance provider pays.