First Home Insurance Information
By the time you move into your first home you already have insurance. This is simply because no bank will give you a loan (a.k.a. as a mortgage) unless you have enough insurance to cover the home in the event of a disaster.
This insurance covers the basics and in actuality insures the lender more than it does you. This is a start but it would be in your best interest to make it a little more comprehensive once you fill your house with your belongings. The idea of losing your furniture, your appliances, your electronics and other treasures to a fire or other natural disaster takes on a whole new meaning when you are a homeowner.
Why do you need insurance? It all boils down to a series of “what if’s.” If you know that you will never get sick, you don’t need health insurance. If you can guarantee that you will be healthy and live to be 100, you don’t need life insurance. If you know that you will never be subject to a natural disaster you will never need fire insurance or any other coverage. There is a chance, of course, that none of these things will happen to you, but can you be absolutely sure? What will you do if everything that you hold near and dear is lost?
Most responsible people carry some form of insurance. Whether it's for your first home or your last, you will want to know what to insure and how much insurance you need to have.
You don’t want to under insure your possessions but you don’t want to over insure either. If you are under insured you might not be able to rebuild your home in the event of a catastrophe. If you over insure, you will be spending money that you might not have on the basis of what “might” happen.
For example, whenever you buy a new appliance or electronic device you will be asked if you want to insure it. Sounds reasonable but if you insure each individual purchase it will wind up being quite costly in the long run. Most new purchases come with a warranty and for all practical purposes this should be sufficient. Besides, you already have some insurance to cover your home appliances under a home warranty plan. This covers your basic home appliances like heating, air conditioning, water heater and the like. Insuring each individual piece is expensive and you might want to consider investing that amount of money somewhere where it can grow, and if something breaks down you can replace it from that account.
As a first time home insurer you don’t want to over insure or under insure, but you will want a policy that increases the amount of coverage annually to keep up with the rising costs of construction. To determine the amount of coverage that you need it would be prudent to consult with your insurance company representative on a yearly basis.
Everyone’s insurance needs are different. Basically you are thinking about insurance against loss of property. A Home Owners Plan is recommended as it gives you more coverage and includes liability in the event that someone injuries themselves on your property. If you live somewhere that is prone to natural disasters like earthquakes and flooding, you may find it difficult to find affordable or any insurance at all that will cover you. If you have a pool or spa on your property insurance will also be very high, but these are all rather special circumstances. Just because you have insurance doesn’t mean that you are adequately insured.
After you buy that first home you will want to look at your policy in depth and make adjustments accordingly. Thinking of all of the things that could happen to you is mind boggling and it is difficult formulate a plan on your own. Do some comparison shopping and then consult an insurance agent specialist who will discuss the pros and cons of high versus low deductibles (the amount you will pay out of pocket before your insurance policy kicks in). If you insure everything through the same company you will generally be given special considerations. A good insurance agent can save you money by tailoring a plan to serve your individual needs.
Source: Tips and Traps for New Home Owners