Buying a home for the first time is a major purchase, likely the biggest one you've made thus far, and you need to protect your new asset. When you buy your first starter home, make sure it and you are well-protected with a homeowners insurance policy that includes these important coverages.
Dwelling Coverage for the House Itself
Dwelling coverage is the portion of a homeowners insurance policy that protects the house itself. The coverage will insure your home against a variety of risks, and you should know exactly what risks those are and how much protection your primary dwelling has.
Homeowners policies may be written as named perils or open perils policies. Named perils policies provide coverage for your house against only the risks that are listed, while open perils policies protect your home against any perils that aren't mentioned as exclusions. Open perils policies tend to offer more comprehensive protection.
The amount of protection that a policy provides will be detailed within its dwelling coverage section, where there'll be a specific limit for the coverage. This is the maximum amount the policy will pay if your home is completely destroyed or severely damaged in a covered incident.
To make sure your new house is well protected, look for an open-perils homeowners insurance policy that offers dwelling coverage that's at least equal to your home's current fair market value. Keep in mind, the fair market value of your home might be more than you pay for it if you purchase a fixer-upper and do work on it.
Other Structures Coverage for Other Structures
Other structures coverage insures secondary structures that are on your property. For example, detached garages, storage sheds, and gazebos are other structures that stand apart from your house but that you still need to protect. If a tree falls on a detached garage, you'll want compensation so that you can repair or rebuild the structure.
Whether you need other structures coverage depends on whether your new property has any of these secondary structures.
If you have outer buildings or structures, get homeowners insurance that includes other structures coverage. The limit for this coverage should be equal to the value of these structures so that they're fully insured and you don't pay premiums on superfluous protection.
If you don't have any outbuildings or other structures, you don't need other structures coverage and can save a little on your premiums by forgoing it. Should you ever add a detached garage, storage shed, or similar feature, though, add other structures coverage to your policy.
Personal Property Coverage for Your Stuff
Personal property coverage is the protection that insures your belongings. It might protect everything from furniture and clothing to electronics and jewelry. You need to look at two factors when checking a homeowners policy's personal property coverage.
First, make sure that the limits on a homeowners policy's personal property coverage are equal to or greater than the value of your belongings. Most policies will provide plenty of personal property protection because the coverage is usually set at 25 to 50 percent of the home's coverage limit.
If you're buying your first house, you probably don't need more than this amount of personal property coverage. Assuming you've focused on saving up money for a down payment and closing costs, you are not likely to have an inordinate amount of high-value possessions. So long as you don't, you should be fine with the standard amount of personal property protection.
Second, consider whether you want actual cash value or replacement cost value personal property coverage. Actual cash value will insure your belongings for their fair-market value and costs a little less. Replacement cost value will pay whatever it costs to replace items, even if the amount is more than their value, but this option increases your premiums some.
If replacement cost value protection fits within your budget, upgrade your personal property protection to this so that your things are more fully protected. If your budget is already tight, though, you can skip the extra protection in order to save a little bit. You'll still get some compensation if you lose your belongings.
Personal Liability Coverage for Your Household
Personal liability coverage is a protection that insures you and your household. Should someone blame you for causing harm or property damage in a covered incident, this coverage helps pay legal costs and settlements.
How much personal property coverage you get is dependent upon your own risk tolerance. If you want a lot of protection, get a high limit for this coverage. If you think the likelihood of a lawsuit is slim and don't mind taking on that risk yourself, you can select a policy with a lower limit.
If you are purchasing a new house and need homeowners insurance for it, contact the team at L.A. Insurance.