For those looking to buy a home, particularly first time home buyers, there are a lot of details to cover. With everything from the logistics of making the purchase and the move, to handling the cost of the mortgage loan, it’s easy to get in over your head. If you’re buying a home for the first time, one thing you may be unfamiliar with is property insurance. Let’s fix that, shall we?
Open vs Named Perils
Property insurance typically is divided between open and named perils. The former essentially covers any sort of damage done to property without the need for a specific classification. Note that there are some exceptions, so having an open peril insurance policy is no excuse to get adventurous and hands on with the remodelling.
Named perils, on the other hand, provide insurance payout only if the source of the damage is among those named on the insurance purchase. I.e., if you have insurance for fire, and fire damage occurs, congratulations! You’re covered. Still no excuse to torch the place, but you understand the point.
Tip 1 for First Time Home Buyers: Know your credit
The quality of your credit is going to affect the premiums you pay on insurance. It’s important to know your credit score, and if it is lacking, you need to shore it up ahead of time before looking into buying a home, as it can hurt what you pay in mortgages and insurance.
Tip 2 for First Time Home Buyers: Get Complete and Bundled Coverage
Knowing what perils your house may face (everything from inquisitive neighbors to earthquakes to floods) will allow you to assess the coverage you need. It’s important to get a policy that covers all of your needs, and if you can bundle that with other things, such as auto insurance, or the mortgage (we are talking houses here, right?) then so much the better. It’s like a two-for-one on safety and security, and you can’t beat that.
If you’re a first time home buyer, or really anyone looking to purchase property, it’s important to understand all of the factors that will affect that purchase. So, once you’re done with the ooh’s and aah’s over your dream home, remember to check your credit and find the type(s) of insurance you will need.