Take Steps to Protect Your Most Valuable Asset, Your Home
Buying a home is one of the largest investments that many people will ever make. Because of the extreme importance of this asset, home buyers should make sure it is properly insured.
The first step home buyers should make after signing a purchase-and-sales agreement is to meet with an insurance agent. Provide the agent with a copy of the real estate listing, the purchase-and-sales agreement and the name and address of the lender. Review the information in detail with the agent and answer all questions completely and honestly. This is critical when determining the amount and type of coverages needed.
Be sure your property is insured at “replacement cost value”. That is, what the cost would be to rebuild in today’s market. The actual price of the home does not accurately reflect the replacement cost as it may include many things that insurance does not cover such as land, waterfront, septic or landscaping.
Your lender will want the replacement cost limit of your insurance to be as close to the mortgage amount as possible, so an onsite inspection may be required. Be sure to request copies of any inspections or appraisals done by your insurance carrier or your lender.
At the time of closing, make sure you have a copy of your insurance binder. An insurance binder certifies that you have procured the proper insurance for the property. Most lenders will not close on a property unless a binder has been issued.
Most homeowners policies will cover a certain amount of personal property in addition to the structure. However many items are not covered or have limited coverage such as fine arts, some jewelry, photographic equipment, computer equipment, boats, specialty tools and more. Review all your possessions with your agent to determine whether you’ll need additional coverage to protect these items.
Homeowners should also consider some optional coverages available. Most people did not foresee the damage that floods brought to the New England region within the past few years and were devastated. In addition, many forecasters anticipate at least one catastrophic storm hitting the region within the next several years. Talk with your agent about flood or wind storm coverage and what to do to best protect your property.
When making an investment in a new home, be sure you protect it with adequate insurance and risk management. Contact us today to learn more.