Basic info on home insurance for new homeowners

Homeowner’s insurance (or home insurance) is a type of property insurance that provides coverage against potential damages and losses in a residential home, in addition to any furnishings and other assets within the property.

Many people think that only homeowners require insurance, which isn’t exactly the case as there are many landlords who require renter’s insurance coverage for tenants. Whether it’s required or not, however, having the type of protection provided by home insurance is always a smart move.

While homeowner’s insurance policies are infinitely customizable, there are several standard elements that indicate what particular costs are covered by the insurer.

Damage to a home’s exteriors and interiors

In case your home sustains damage from fire, lightning, hurricanes, or other covered types of disasters, your insurer will provide compensation so you can make the necessary repairs, or even rebuild your home entirely.

Damage due to “acts of war” or “acts of god” such as earthquakes or floods are typically not covered by standard home insurance and may require additional riders for those who want that type of coverage. Any freestanding structures on the property such as sheds, patios, or garages may also require separate coverage.

In case you have high-priced items in your possession such as fine art, jewelry, or antiques, you may want to consider paying extra for a rider to cover them, include them in an itemized schedule, or even purchase a separate policy.

Mortgages and home insurance

Homebuyers applying for a mortgage are typically required to submit proof of insurance before the financial institution approves their loan. The home insurance policy can be purchased separately or acquired by the lending bank. Those who opt to purchase their own insurance policy can compare available offers and choose the policy that works best for their needs.

The lending bank may also obtain an insurance policy at an extra cost for homeowners, in case they do not have the home covered from damages or loss.

All payments made towards a homeowner’s insurance policy are typically included in the monthly payments for the mortgage. Lending banks receiving the payment allocates the portion reserved for home insurance coverage to an escrow account. As soon as the insurance bill is due, the amount owed by the homeowner is then settled through this escrow account.

Difference between home insurance and home warranty

These terms seem very similar, which is why some people confuse one for the other.

Home warranties are contracts that provide for replacements or repairs of home appliances such as refrigerators, washing machines, stoves, and so on. Standard warranties typically expire after a certain timeframe (usually one year) and provide coverage for defects or issues caused by poor maintenance or eventual wear-and-tear. Unlike home insurance, warranties are not required for homeowners looking to qualify for a mortgage.

While choosing an ideal homeowner’s insurance policy might feel overwhelming especially for first-time home buyers, don’t feel too stressed out over the extra cost. It helps to remember that the premium you’ll be paying for home insurance will be a fraction of the amount you’ll need to repair or rebuild your home in case you encounter any unexpected situations.

Planning to buy or sell a home in Cashmere, Lake Chelan, Leavenworth, Wenatchee, or other desirable communities in Washington? Get in touch with us at Coldwell Banker Cascade Real Estate today at 509.888.8887 or email us at info(at)cbcascade(dotted)com