Insight to home insurance - By Lisa DiBiase

 

Imagine losing everything you own – every single possession in your home and maybe even the house too. Ask anyone who has lived through a devastating fire what it feels like to suddenly have nothing but the clothes you’re wearing and you’ll understand the importance of buying home insurance.

The purchase of this all-important coverage is the one point in the home-buying process for which few first-time homebuyers are prepared. The home insurance is factored into the mortgage loan payment: Principle – Interest – Taxes – Insurance (PITI) which becomes your monthly mortgage payment. Since the lender won’t allow the deal to close without it, the purchase of a home depends on the homeowner obtaining coverage since it impacts the monthly payment.

WHERE TO BEGIN:

Before you close on your home, you will need to purchase home insurance. You will need to know how much coverage you need and what the premium cost is. The insurance value is based on how much it would cost to rebuild the house, not what the home is actually worth at fair market value. Since you already have an established relationship with your real estate agent, they are a great source to start with. Otherwise your auto insurer may be another person to contact.

COVERAGE:

The typical homeowner insurance policy covers damage to the home caused by fire, some natural disasters – wind and hail for instance – vandalism and theft. In some areas homeowners need to purchase additional earthquake or flood policies, be sure to check with your real estate agent to better understand if you fall under this category. Your personal belongings, up to a set limit, are covered under your policy as well. Be sure to ask if they set a limit on some items, such as jewelry or any expensive pieces/art you own.

Coverage may also protect you:

For damage to other structures on your property such as the garage, a shed, fencing and an in-law unit.

From liability if someone is injured on your property.

From out-of-pocket expenses, such as housing and living expenses while your house is being repaired.

From liability for damage you or a family member causes to other people or their property.

WHAT'S NOT COVERED:

There are some items are known as “exclusions” in your policy. Be sure to ask the insurance agent to specify for you. The following is a list of some typical exclusions:

Water damage caused by flood or by sewer or drain backups.

Loss of pets.

Automobile damage or loss.

Damage as a result of war.

Neglect.

Power failure.

Earth settlement or other movement.

DEDUCTIBLE:

An insurance deductible is how much money will be expected to come out-of-pocket before the insurance company begins paying a claim. Some typical homeowners insurance policy deductibles are $500, $1000, $2500, and sometimes $5000. I recommend choosing the deductible carefully by considering what kind of a financial position you would should an unforeseen disaster occur. Ask yourself, would you have enough savings to pay the deductible? The lower the deductible, the higher your insurance premium will be annually which ultimately affects your monthly payment for your mortgage payment.

DISCOUNTS:

Ask your insurance agent about ways to get discounts by adding a burglar alarm, sprinkler system and even smoke detectors may bring down the premium. Revisit your coverage periodically to ensure that it continues to provide adequate coverage, the discounts and policies change each year. Notify your agent on any new life situations as they occur.

While the concept of homeowners insurance is simple, the policies may be confusing and complex. Everyone's situation can very different, so it is important to choose the right insurance professional to help you navigate the best structure for your home insurance.

LISA DIBIASE
LANDING REAL ESTATE
57 Exchange Street, Suite 103
Portland, ME 04101

Ph:  207-775-7653
Fax:  207-775-7622
www.LandingHomesMaine.com