You’ve been saving for months. Searching for that perfect home hasn’t been easy either, but now, you’ve found the one – the perfect house! You’ve signed a mountain of paperwork, taken out a loan, and recruited all of your friends to help you move. What comes next though?
We’ve gathered up some helpful advice to help make your transition as a first time home buyer successful!
Maintaining the Bricks and Mortar (With Insurance)
1. Insure Your Home For Its Replacement Cost
We’ll be honest with you – insurance can be confusing at times – and one of the most common mistakes made by homeowners is confusing market value with replacement cost. Market value is the amount your house is worth and can be sold for on the housing market. The replacement cost is the amount it would cost to replace your home, or parts of it, in the case of a claim.
Your home insurance should cover the cost of rebuilding your home in the event it is destroyed. The cost to replace your home is often more than what you ended up paying for it. For example, if you purchased an older or foreclosed home, the replacement cost would likely be greater than the market value because rebuilding would require costly, new materials.
Tip – If your homeowner’s insurance matches the market value of your home, you may be underinsuring it.
2. Liability Insurance
Protect your assets, including your house, savings, and investments, by making sure you have liability insurance. Liability insurance helps protect you if you are sued for an incident that occurred on your property. For example, a slip-and-fall injury on your front steps during the cold winter months can fall under liability insurance, which covers the cost of the settlement and your legal fees (up to your maximum liability limit).
Additionally, liability insurance ‘follows’ you and extends to personal liability almost anywhere. Go-to examples of this are if your friend gets injured at your cottage or you injure someone while working on your golf game.
3. Have Protection For Your Personal Property
It’s important to review the amount of personal property coverage you have. Will it be enough to replace all of your household objects? In addition, consider taking out a separate insurance plan for unique or costly items. Things like coin collections, stamp collections, jewelry, furs, fine art, cameras, and other expensive belongings may warrant a separate policy.
When requesting a quote or renewing your home insurance policy ask whether these items are covered to ensure you are protected.
4. Look At Coverage For Additional Living Expenses
If your house is destroyed or uninhabitable for a short period of time while repairs are being made, you’ll be thankful for your Additional Living Expenses or ALE coverage. This coverage pays for accommodations, or a portion of them if you have a claim and cannot live in your home for a period of time. Most homeowners’ insurance policies provide policyholders with a benefit worth 20% of your home’s replacement value.
5. Understand What Is Not Covered
This step is just as important as understanding what is covered by your insurance policy. Some home insurance policies offer only provide basic coverage, meaning it only covers the cost of damage caused by perils such as fire, hail, lightning, and theft. Consider extending your policy to include full coverage which protects your home against a wider range of risks.
6. Consider What Other Factors May Affect The Rate To Insure Your Home
Remember, things like the location, the size, the age of your new purchase, and the condition of the home can also affect your insurance rates. For example, living in areas with more severe weather patterns, a higher flood risk, or without a nearby fire hydrant or fire station can increase your rates.