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Homeowners Insurance Tips for a First Time Home Buyer

  First time homebuyer

Homeowners Insurance tips for a first time Homebuyer

Being a first time homebuyer is an exciting time! If you get a mortgage on your new MA home, your lender may require you to insure homeowners. And even if it is not required, home insurance is still something you should have. Insurance can be scary if you do not know what you are looking for. Here are some homeowners insurance tips for first time home buyers to help you get started!

Buy insurance before closing a home

Even if you may not have a home yet, you will probably need proof of insurance when closing. This is also called a binder. Lenders usually like to see that you are prepared. Not having insurance can delay the closure. You can start looking for coverage 30 days before you expect to close. It gives you lots of time to shop and it also allows the insurance agent to take the time to get the right coverage.

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Shop around

As a first time homebuyer, do not just choose the first insurance company that appears in your search engine! Shop around with different insurance providers to see what is available. They may offer different prices or some other coverage option. You can also use a local independent agent to help you find coverage. There are benefits to using a local MA agent, as knowledge of the area. Find out why you should consider using a local Massachusetts agent in your home search! Whichever route you choose, talk to at least three insurance companies before choosing coverage.

Reimbursement cost versus market value

When insuring your new home, consider reimbursement costs versus market value. Make sure you know which your MA homeowners insurance covers:

  • Replacement cost – the cost of rebuilding your home with similar quality materials. You want enough coverage to cover a total loss.
  • Market Value – This policy covers up to the current total cash value of your home. The cost of rebuilding your home can potentially exceed the market value policy.

You should talk to your agent about the right coverage for you and your new home. Ask them what they can expect in the event of a total loss.

What does insurance cover?

It is important to understand what insurance covers and does not cover! As a first time home buyer, you may be surprised that many things are not covered by a typical homeowners insurance policy. For example, your home insurance does not cover damage caused by floods. Other things that are not usually covered include mold, pest infestations, leaks from roofs that have wear and tear and other events that are judged to be preventable. For some things, you may be able to buy additional coverage.

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Be smart when applying

The insurance is there to cover large losses. Be smart about what you are applying for. Consider what your deductible is and your coverage limits. It is possible that the total loss is less than your deductible! If you make an application, you must prepare with a home inventory, the damage documents and make sure that you submit the claim within the allotted time.

Keep your insurance up to date

Your life is going to change over the years. Your insurance should change with your life. Every year, do an annual review of your coverage. You may be able to adjust coverage amounts or coverage types. For example, if you are installing a pool, you may need more coverage. But if you are moving to a smaller home, you may not need as much coverage. You can check with your agent to find the right coverage for your life.

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