First Time Homebuyers Need Homeowners Insurance
As a first time homebuyer, you might not know that your lender will require you to obtain homeowners insurance when you buy your first home. You will be required to insure your home continuously until the mortgage is paid off. When you consider that the largest single investment most consumers make is in their home, it is a good idea for you to maintain insurance even when you own a home outright.
When you purchase homeowners insurance, you buy a package that combines several types of insurance into a single policy, typically—dwelling and personal property protection, protection from personal liability, medical payments coverage, and coverage for additional living expenses in the event that the home is damaged. You can purchase additional coverages and riders also, like coverage that will protect you from the cost of flood damage. There are a lot of choices, so you should have an insurance agent explain the policy in detail to ensure it offers adequate protection for all of your needs.
First time homebuyers need to be advised that they should purchase a policy which includes replacement cost coverage. Replacement cost is the amount it would take to replace or repair your home with materials of similar kind and quality, without deducting for depreciation. Note this does not normally include the price of land since it remains even if the structure itself were totally destroyed. If you do not purchase this type of coverage, the insurance company is only obligated to pay a certain total amount, which may not be enough to replace what you lost.
A first time homebuyer should shop around when purchasing homeowners insurance. It is possible to get different rates from different agencies, even when different firms underwrite a policy from the same insurance company. Be sure to ask about discounts as well. For example, you can usually save money by purchasing both your homeowners insurance and car insurance from the same company. The good news is, the rates in the Triangle are fairly reasonable compared to many areas.
Insurance is a requirement to buy your first home, whether it is in Cary, Wake Forest or Chapel Hill. So, shop around before the date of closing so you can be ready to have your first home protected the minute you own it.
