If you're in the process of purchasing your first home with financing, one of the requirements is that you have your home insured. However, first-time home buyers typically have a lot of questions about home insurance before they purchase a policy. Here are some things you need to know before you get homeowners insurance.
Why Is Homeowners Insurance Required?
Owning a home and having homeowners insurance is not necessarily a requirement, even though it's a good way to protect your investment. However, having a mortgage on your home will require that home insurance is purchased. That is because the bank technically owns your home until the mortgage is paid off, and they want to ensure that the property is protected in a worst-case situation. As long as you have a mortgage, insurance will be required.
How Much Home Insurance Is Needed?
The requirements of home insurance when buying a home is to have enough that protects the structure of the entire property. If the home was completely destroyed due to a fire or other disaster, the insurance coverage needs to be enough to cover the structure so that it can be rebuilt with new construction materials. Your mortgage lender does not care about the personal property in the home being covered, but it often is included with a policy that covers the structure.
Are There Personal Property Coverage Limits?
Be aware that your basic homeowner's insurance policy will not cover all the personal property in your home. There are often categories of items that need additional coverage, such as jewelry, artwork, firearms, and things of that nature. Make sure that you understand what your policy covers in terms of personal property, and if you need any additional policy for high-value items.
Is Liability Coverage Included?
One important part of a home insurance policy is liability coverage. As a homeowner, you now have an asset that can be taken away from you if you were to lose a lawsuit. Liability coverage helps protect your home in this exact situation so that you do not lose it. For example, if someone were to sue you due to a slip and fall that happened on your property, your liability coverage would help pay for the damage so that you don't have to.
Still have questions about your first home insurance policy? Reach out to a company like Ronald H. Krupa Insurance Agency to learn more.