Insurance Information for First-Time Home Buyers

Preparing to purchase one’s first home, apartment, condo, or townhouse is an exciting experience. In the midst of considering your budget, what neighborhood to settle in, how you want to decorate your interior, or how you plan to make use of the property’s outdoor space, it is vital for first-time home buyers to pause, research, and understand homeowners’ insurance information.

Providing proof of homeowners’ insurance will be required before the mortgage is approved, even if the insurance start-date does not go into effect until closing. It will be important for a buyer to begin the process of securing insurance as soon as the seller accepts their offer.

Working with an independent insurance agent will be a beneficial first step of the process. Independent agents do not work for one carrier; they shop various policies and rates through multiple carriers to find the best coverage for their clients. Independent agents can help a first-time home buyer navigate what type of policies they will need and how much coverage they should secure.

In regard to how much coverage a property will need, lenders typically require that a homeowners’ insurance policy has a dwelling limit that matches the home’s replacement cost value. Many first-time home buyers mistake market value for replacement cost. The market value is the cost at which a property will sell on the open market. The replacement cost value is the estimated cost of rebuilding the home in the event of a total loss.

Personal liability insurance is often included as standard coverage on homeowners’ policies but can also be purchased as a standalone policy. If a guest is injured while visiting the premises, liability coverage acts as a layer of protection to safeguard a homeowner’s finances. Medical bills, legal representation, the cost of pain and suffering, and lost wages can quickly add up, so personal liability insurance is an essential coverage.

An insurance endorsement/rider is an amendment to an existing insurance contract that changes the terms of the original policy. Endorsements add protection for circumstances in which a typical policy excludes or limits coverage; as examples, insurance coverage for water or mold damage, or additional coverage for items like jewelry, fine art, or electronics. The need for endorsements will be dependent upon the age and size of the property being purchased, the location of the property, and if the homeowner maintains valuable personal items. Independent insurance agents can help a first-time homebuyer secure riders based on their unique circumstances.

Being able to have peace of mind regarding homeowners’ insurance allows a first-time home buyer to focus on the memorable details of their home buying experience. The independent agents at Gill Insurance of the Lowcountry are here to help first-time home buyers secure proper coverage at the best rates available. Give us a call today to get started! (843) 388-5021.