Insurance Basics for New Home Owners

Have you just bought your first home? Congratulations! Welcome to the land of home ownership.

Part of what you have to think about, now that you own your own home, is the need for the right level of insurance. You may already have insurance, which you needed to get in order to obtain a mortgage. Even if you do, read on. You may want to adjust your coverage, once you know more about your needs and the basics of homeowner insurance.

First and foremost, homeowner insurance covers more than just the building or structure of your home. It should also cover your belongings inside the home. In addition, you should also carry a standard amount of liability insurance to protect you from claims made against you for injuries sustained on your property.

  1. Structure

    Your homeowner policy should protect your homes structure (and any other structures on the property, such as a separate garage, shed, gazebo or pool). Your policy should cover damage from common threats including fire and smoke, lightning, theft and extremes of weather. In most cases, anything that causes damage or loss to your home should be covered. Having said that, most policies have exclusions for certain causes of damage. Depending on the cause and type of damage excluded, you may either buy an endorsement to your existing policy or purchase a separate specialized policy. For instance, if you need coverage for hurricanes, you will need a specialized policy.

    Always keep in mind that you should cover the replacement cost of the home, and not just the amount left on your mortgage!
  2. Belongings

    Your personal possessions should also be covered under your homeowner policy. Unlike the structure of the building, which can't come with you unless you own a mobile home, your belongings sometimes travel. In most cases, no matter where the damage occurred to your possession, it will be covered by your insurance.

    One of the first things to consider as a new homeowner is the doing of an inventory! This can make all the difference when you find yourself needing to make a claim later. Use our handy home inventory checklist.

    Typically, the insurer will peg the value of your belongings at half the value of the home. Again, a personal inventory can help here, as it will allow you to quote the real value of your possessions.

    An inventory will also help you determine your real needs for insurance coverage. Some items will need to be covered individually, like expensive jewelry. Homeowner insurance typically specifies a limit for the amount you can claim for expensive valuables like jewelry. Your personal inventory will help you determine whether that default coverage is sufficient or whether you need an additional endorsement.
  3. Liability

    As part of most basic homeowner insurance, you will receive some liability coverage. This provides for compensation of others who are hurt on your property, regardless of the cause. You will also be covered for injury that occurs while you are there or away. This can be especially important if you have a pool on your property because even if a person is injured while sneaking into your pool, you could be sued.

    Most standard policies will allow for $100,000 in liability per claim. You can get higher liability limit's if you feel you require it. If you are a pool owner, you should consider an umbrella liability policy, which would normally be separate from your homeowner insurance policy.

While you may be very happy with your coverage once you have it set up, don't forget to review it at regular intervals. As you do home renovations and increase the value of your home, you'll likely need more insurance on the structure. As your belongings increase in value, you'll likely need more insurance. If you install other structures on the property that might be subject to damage or break in, you'll likely need more insurance.

Life changes. Keep your insurance up to date!

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