Excalibur Insurance
Insurance Advice For First Time Home Buyers

Insurance Advice for First Time Home Buyers

August 17, 2021


You and your family have been saving for months. Searching for that perfect home hasn’t been an easy task, 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?

In this blog post, we’ve gathered up some helpful advice to help make your transition as a first-time home buyer as successful as possible.

Maintaining the Bricks and Mortar (With Insurance)

Insurance as a first-time home buyer can be overwhelming. If you have young children or your budget is tight, you might not want to think about any additional costs – but insurance is a great way to secure you and your family’s peace of mind. Here are Excalibur’s top insurance tips for first-time home buyers:

1. Insure Your Home for Its Replacement Cost

One of the most common mistakes made by homeowners, and especially first-time home buyers, 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 event 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 family’s home, you may want to review your coverage as you could be underinsured.

2. Home Insurance Protects Your Liability Wherever You Are

Protect your assets, including your house, savings, and investments, by making sure you have liability insurance. Liability insurance helps protect you and your family 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 your family and extends to personal liability almost anywhere in the world. Go-to examples of this are if your friend is injured at your cottage or you injure someone while working on your golf game.

3. Ensure Your Property Coverage Reflects Your Needs

It’s important to review the amount of personal property coverage you have. Will it be enough to replace all of your household objects? Consider your electronics, clothing, your children’s bikes, etc. In addition, consider taking out a separate insurance plan or insurance “rider” 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. Be sure to discuss with a broker if you own any of these things.

When requesting a quote or renewing your home insurance policy ask whether these items are covered to ensure you are protected.

As a first-time home buyer, your insurance should be designed to cover all your needs. When moving into a new home for the first time, you might have an easier time taking an inventory of all that you own so you have a better idea of your coverage requirements since your belongings aren’t already strewn all over your house. You may even want to take photos of your possessions to provide in the event of a claim so you can expedite the process.

4. Consider Coverage For Additional Living Expenses

If your family’s 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 your family is forced to evacuate from your home for a period. 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 as a first-time home buyer. 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 insurance as a first-time home buyer to include full coverage which protects your home against a wider range of risks. A broker can help you review your coverage needs and supplement where necessary.

6. Consider What Other Factors May Affect the Rate To Insure Your Home

There are multiple factors that can impact the rate to insure your home. As a first-time home buyer, insurance may make you wary as your budget could already be stretched tight. A number of things will increase or decrease how much your premiums will be. These include:

  • Location of your home
  • Size of your home
  • Materials/labour
  • Age of your home and condition
  • Proximity to water
  • Extreme weather risk
  • Natural disaster risk
  • Crime risk
  • Proximity to a fire station/hydrant
  • Security systems and smoke alarms
  • Additions or modifications
  • Luxury features, such as pools

Is this your first time buying a home?

Congratulations on your new home! In the years to come, your home will be a place of many new memories for you and your family. Home insurance can help secure your mind and help you get back on your feet following an accident.

Check out our Home Insurance Terms Made Simple blog here: https://excaliburinsurance.ca/blog/home-insurance-terms-made-simple/

Have a question, or simply looking for more information?

Give us a call from anywhere in Ontario at 1-888-298-7343.

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