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What to know about Homeowners Insurance before you purchase your new home

house for sale imageSpring is known to be the busiest time of year in the real estate industry. As the temperature rises not only do we see blossoming flowers and the signs of life returning to nature, we also see a dramatic increase in the number of homes hitting the market, as well as a larger number of potential home buyers looking to find their perfect match.

You should start thinking about homeowners insurance before you find a house and begin shopping for coverage as soon as you enter into a contract.

Gather information about the house

Before you begin shopping around for coverage and quotes find out as much as you can about the house you want to purchase.  You’ll need to know the square footage, the number of bathrooms, the materials used for the roof and exterior walls, the age and condition of the house, and the condition of decks, patios, garages, etc. These are items that help determine how much you will pay for coverage.

Coverage options

Homeowners need to purchase insurance to protect their homes and personal property along with protection against liability for accidents that injure other people or damage their property. The better your coverage, the less you will have to pay out of your own pocket if disaster strikes. If you will have a mortgage on your home, your lender will require you to purchase coverage equal to or higher than the “Replacement Cost” amount per your pre-purchase appraisal.  Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation.

If you will not have a mortgage on your home, you have an option to insure your home for its “Actual Cash Value”. Actual Cash Value is the amount it would take to repair or replace damage to your home after depreciation.  Your insurance agent can help you determine which option is the best for your personal situation.

Most homeowner’s insurance policies come with a standard amount of coverage for possessions kept in your home, usually 50% of coverage amount purchased for the home itself.  This “Contents” coverage limit can be adjusted to an amount closer to the value of your possessions. Contents coverage may be purchased on a Replacement Cost or Actual Cash Value basis.  Speak with your insurance agent about special coverage for valuables.

If you live in a high-risk area, your mortgage company may require you to purchase flood coverage as well.  Even if it’s not required, you should consider purchasing this valuable and inexpensive coverage.  Homeowners insurance policies don’t cover flood damage. We encourage you to visit www.floodsmart.gov to see the home’s risk of flooding and receive quotes for flood coverage offered through the National Flood Insurance Program.

Deductible options

A deductible is the amount you pay out of pocket on any claims you may file and applies only to the coverage on your house and personal property.  One good way to lower your premium costs is to choose a higher deductible.  If you choose a higher premium amount, be sure to keep enough money in an emergency fund to cover the deductible when you have a claim.

Credit Ratings

Did you know your credit score can impact the cost of your insurance policy?  A good credit score could make you eligible for a discount credit ratings are based on length of credit history, new credit, payment history, amounts owed, and types of credit used.  Visit Experian.com for ways on how you can improve your credit score.

Access Home agents are available to help you with all your insurance needs. If you aren’t familiar with Access Home Insurance Company, visit our website at www.accesshomeinsurance.com.

Sources:  consumeraffairs.com; kiplingers.com