Make sure you know how much coverage you will need to insure your new home
If you’re about to buy a house, you’ll also need to purchase a home insurance policy that can help protect you financially from the loss of your house and belongings in the event of a destructive incident like a fire. And before you shop for an insurance policy, you’ll have to find out how much coverage you need.
Home Insurance Coverage
Most home insurance agents have formulas and tools they use to calculate the value of your home and how much it would cost to replace the home in the event of a total loss. These calculations take all the valuable features of your home into account, like crown moldings, hardwood floors, and total square footage. As your insurance agent makes these calculations, be sure that he or she knows about every one of these features.
After the total replacement value of your home is determined, your mortgage lender will usually require you to purchase insurance coverage that will pay for at least 80 percent of your home’s value if the home is lost. Mortgage companies do this in order to protect their investment.
Be aware that the loss of your home won’t release you from the obligations of your mortgage, so it’s in your own best interest to buy coverage that will replace the total value of your home, since you’ll be paying for the mortgaged property anyway.
Your home insurance coverage will also need to protect you from liability in the event that someone becomes injured on your property. When you receive quotes from home insurance providers, review the liability section and make sure that your assets are protected if someone files a lawsuit against you after an injury incurred in or around your home.
Are you in the process of buying a home? Do you have home insurance advice to share with our readers? Leave your thoughts in the comment section below!