Posted by: Robin Gronsky | December 19, 2012

What Kinds of Insurance Do You Need To Buy When Buying a Home

The most common type of insurance that home buyers purchase is called homeowners’ insurance.  It consists of protection in the event your house (or a part of it) catches fire, is destroyed by wind, falling trees and bursting pipes.  It will not protect you in the event of flooding, unless the flooding was caused by a reason that is covered (think your roof is damaged, letting in rain that destroys your home’s interior).  In addition to damage to the home, the insurance policy will cover damage to your personal possessions, such as your furniture, appliances, flooring, window treatments, and electronics.  It will probably exclude jewelry.  For extra protection for your very valuable possessions, you need to buy a rider to the insurance policy.  You also need to document what personal property you own.

Homeowners insurance also covers you in the event you are sued because of someone else suffering an accident on your property.   In our lawsuit-happy culture, this protection is extremely important and depending on how much you earn and have, you may want to get extra coverage to ensure that you are not bankrupted in the event you are sued.

The amount of homeowners’ insurance that you buy is based on the replacement cost to rebuild your house in the event of total destruction.  If you are getting a mortgage, your lender will require you to buy enough insurance coverage to at least equal the mortgage amount.

When buying homeowners’ insurance, check around to find out which insurers give better service if you need to make a claim.  Also find out which insurer has the cheapest premium with a good level of service so comparison-shop.  You should do this search each year to see if your insurer is still known for good service when claims arise and to find the cheapest premiums.  Ask each company if they offer discounts and see if you qualify for any.

In addition to homeowners’ insurance, you may need to buy flood insurance.  Your lender will require this type of insurance if your property is located within a flood zone as designated by the flood zone maps prepared by the federal government.  You may want to purchase flood insurance even if you are not buying a property that’s located in a flood zone as there are other times that a property will flood that will not be covered by your homeowners’ insurance policy.  The flood zone maps are being revised as our weather patterns change.  Many homes that were flooded due to Superstorm Sandy had never flooded before.

If you are buying your new home all cash (no mortgage), it is up to you to decide whether to buy any homeowners’ or flood insurance.  For you, the decision is whether you have enough money to totally replace your house in the event of total destruction.  Not many of us do, so even without a mortgage, I recommend that you buy insurance.

If you are buying or selling a home, you will have questions.  I answer your questions and return your phone calls.  Call me at 201-251-8001 or email me at RGronsky@Gronskylaw.com so you understand what is happening with your transaction.

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