Buying Home Insurance for the First Time? Know These 3 Things

If you are buying your first home, one of the requirements of your mortgage lender is that you need to have homeowners' insurance. If not, your mortgage won't be approved by your lender. It helps to know these 3 things about your homeowners' insurance options before you decide on a policy.

1. Your Deductible Impacts Your Premiums in a Big Way

You will have to decide on what kind of deductible you want for your homeowners' insurance policy, which is how much you pay before your insurance provider will start paying the difference. It is important to pick a deductible that you can afford to pay with your cash on hand. If not, you'll have a huge problem if you ever need to use your insurance policy. 

While a common deductible is $1,000, you can often save money by picking a deductible that is 1% of your insurance coverage policy. This means that if you have a policy that covers your home for $300,000, you will need to pay $3,000 as your deductible. While you end up paying a lot of money to use your insurance, figure out how long it would take you to break even on that high deductible in the form of lower premiums each year. You may discover that if you go as few as 5 years without a homeowners' insurance claim, you'll be saving money by selecting that higher 1% deductible. 

2. Your Distance from the Fire Department Matters

You may be wondering why nearby fire stations will make an impact on your insurance premiums. This is because the fire department will be able to act much faster if your home were to catch on fire, leading to less damage caused to the home and cheaper repairs. This is something to consider if you are buying a home out in the country and the nearest fire department is many miles away and they cannot react quickly.

3. Your Personal Property Has Limitations

While most of the personal property in your home will be covered if you need to make a claim, know that there are certain categories of personal property that have limits such as artwork, jewelry, furs, firearms, and other expensive items. Always ask your insurance provider about the coverage for these types of items if you have them in your home. You do not want to be caught off guard if you have a house fire and discover and discover certain items are not covered.

For more information, contact homeowners' insurance providers.