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Buying Your First Home? 3 Things You Should Discuss With Your Insurance Agent

by Raymond Gibson

Buying your first home is an exciting time, but unfortunately, it can also be extremely stressful. In addition to moving all of your belongings and setting up utilities, you might also find yourself wondering how to foot the bill if something were to happen with your investment. However, a decent homeowner's insurance policy can protect you from financial disaster in the event that your home burns to the ground. Here are three things you should discuss with your agent, so that you are prepared for the unfamiliar road ahead:

1: Deductibles

If you are like most people, the last thing you want to pay for after dealing with a frustrating series of appliances failures is an insurance deductible. In an effort to make things easier for yourself later, you might grill your insurance agent about finding you a policy with a low deductible. However, that low deductible might not be something you actually want to have.

Oftentimes, low deductibles come along with higher monthly premiums. Instead of paying a high deductible if anything happens, you might find yourself cringing every single time you make your insurance payment. In fact, research has shown that changing from a $500 deductible to a $1000 deductible can save you up to 20% on your monthly homeowner's insurance premiums.

As you discuss your insurance options with your agent, talk about the cost effectiveness of each deductible. Your insurance agent can walk you through typical insurance claim totals so you can understand the math. For example, since you might not be familiar with the average cost of replacing a roof after a bad windstorm, an agent could explain your estimated out-of-pocket expenses with each available policy.

2: Storage Facilities

Do you use a storage facility to store your extra furniture, seasonal home décor, clothing, or memorabilia? If you plan on hanging onto that storage space, you might be concerned about covering those items under the umbrella of your homeowner's insurance policy.

Although you might assume that everything in your unit is covered, the fact of the matter is that most homeowner's insurance policies don't offer full coverage for off-site possessions. In fact, as a general rule of thumb, most policies allocate 10% of the total coverage limit towards self-storage units. For example, if you have $150,000 worth of coverage for your homeowner's insurance policy, you might only have $15,000 to cover anything inside of your unit.

However, if you need more coverage than that, you might need to talk with your insurance agent about adding a rider to your plan. An insurance rider is essentially an addendum to your normal insurance policy, which allows you to customize your plan for your needs. To design a rider that protects your storage unit, make a list of everything that you have in your space. After your agent knows what you are trying to protect, he or she can tweak your policy.

3: Exclusions

Your insurance company can help you to weather the storm during catastrophic, emotional times. Unfortunately, there are certain instances where an insurance company won't be able to offer you coverage. When you meet with your insurance agent, it is important to understand what your policy won't cover. Here are a few common exclusions that you should be aware of:

  • Acts of War: Are you worried about how to clean up after that zombie apocalypse? You probably should be. Most homeowner's insurance policies won't cover acts of war.  
  • Water Damage: When it comes to water damage, things can get complicated. Although most homeowner's insurance policies will cover water damage due to leaky pipes, you might be on your own if a ground flood plows through your area.

Understanding your homeowner's insurance policy might help you to prepare for the worst, so that you can relax and enjoy your new home. For more information, talk to an agent from a company like Colling Insurance Services, Inc.