As a renter, you may be unaware about all the expenses that come with owning a home. A mortgage is probably the most expensive part of a homeowner's budget, but you are also on the hook for a few other things. Property taxes, home maintenance and homeowners association fees are just a few common ones, but one extra expense that will come in handy is homeowners insurance. This type of insurance plan will help you recoup your losses if your home is damaged and you need to make repairs. You may think that your home is foolproof and that this is unnecessary, but signing up for this coverage will help you out in an emergency. If you are a first-time homebuyer and are not sure of the process of getting homeowners insurance, here are a few helpful tips:
Decide your coverage plan
The most common coverage that homeowners get is market value, which will pay you to help repair your home. These plans are generally on the inexpensive side because their coverage will just pay for whatever the value of your home is.
Guaranteed replacement coverage is another plan to consider, as it is a bit more encompassing and will help you pay for repairs for your home.
Be aware of what is covered
When you are looking at different types of plans, you should be aware of what each will cover. Many homeowners insurance policies generally cover damage from fire, theft, vandalism and certain items you may have lost. Some plans will also cover natural disasters like storms or tornados, but this all depends on where you live. You may have to ask to get more policies if you want earthquakes, landslides or other disasters covered. You may want to ask about an Act of God plan, which will cover you for any disasters that are out of human control.
Be sure to read the fine print to make sure you are getting all your repairs covered instead of a portion. It would be a major setback if you find out your plan won't cover everything and have to pay out of pocket.
Ask about specific water damage
Water is an interesting predicament for insurance. Damage caused by faulty pipes or an overflowing water heater may be covered by your plan, but many do not cover flooding unless you specifically ask for it. Make a list of all the water damage you can think of and ask your insurance provider whether it will be covered. It is better to be safe than sorry.
Choose your own plan
If you have been approved for a mortgage and have yet to sign up for homeowners insurance, your lender may do so for you. This can result in them picking a policy that is outside of your financial means and one that does not cover some necessary items you may need. By researching insurance plans beforehand, you will be able to get a plan you can afford and one that will properly cover everything.