When you're buying a home, there are plenty more exciting things to think about than arranging home insurance. Unfortunately, it's not something you can afford to ignore. Having the wrong insurance coverage is almost as bad as having none and can lead to financial disaster if a crisis strikes.

 

Luckily, getting the right policy doesn't need to be complicated. Here's how to approach buying insurance for a new home, to make sure you get suitable coverage at a good price.

 

1) Evaluate Your Potential Home

If you've found a home you love, take a moment to step back and assess what the insurance situation could be. While a hefty insurance bill might not be deal breaker, it's something to bear in mind while making your final decision. Many things can reduce the cost you'll pay, including:

- Good security, including a modern alarm system or a monitored alarm system.

- A well-built, well-maintained roof that can cope with whatever the weather throws your way.  

- Updated heating and electrical systems to reduce the risks of catastrophic failures, water, fires, and so on.

- Fire and smoke detectors to catch any danger early

If your potential home lacks these features, it's worth checking to see how much it'd cost to install them before going any further. The insurance savings will add up dramatically over the years to come.

 

2) Location Matters

Next, check the crime statistics of your proposed location. Also check the local history of floods, storms, and other disasters.   These have a profound effect on your insurance costs.

Ask for advice from the real estate agent on how much the sellers are really paying for their coverage, as it could be significantly different to a no-obligation, provisional quote you'll get online. An otherwise perfect home is much less desirable if you can't afford to insure it because of its location.

 

3) Decide What Coverage You Need

It's important to neither under-insure nor over-insure your home. For a starting point on the amount of coverage to buy, work out how much you'll need to repair severe structural damage that makes your home uninhabitable. Importantly, this is based on rebuild cost and not market value.  Most insurance agents have software that can determine a replacement cost estimate if they are entering adequate and correct details of the home’s construction.  If you are shopping and getting significantly different coverage suggestions, you might ask for copies of the replacement cost estimates and compare the details and accuracy of the data entered.  Insuring the dwelling at 100% of replacement cost will usually qualify you for some extra coverage, as a margin of error.

Next, add in the value of the personal property you will have in the home, not forgetting that certain, more valuable items such as jewelry, fine arts and collectibles, may need to be specified individually rather than included in the total.  Homeowner policies will include a certain amount of personal property coverage, based on a percentage of the dwelling coverage.  That amount can vary by company and usually can be increased or decreased.  Add a little extra to give you some leeway, and you have your basic coverage amount to apply for.

 

4) Investigate Discounts

- New Build Discount: Homes built within the last decade or so will usually be more secure and more resistant to damage. This reduces the risks to the insurer, resulting in lower premiums.

- Alarm System Discount: Local alarms and monitored alarms can reduce the premium. A few homes have fire sprinkler systems, especially in more rural areas, that will qualify for a discount.

- Claims-Free Discounts: If you've held insurance policies before, you may be able to transfer a no-claims discount over to your new policy with the same company.

- Bundles and Combinations: You can often secure healthy discounts if you take out multiple policies with the same company. For example, it's usually cheaper to insure your home and auto with the same company, qualifying your for discounts on each.

_Impact Resistant Roofs: Some companies in certain areas of the country offer significant discounts if a home has a UL class 3 or 4 rated impact resistant roof. 

Don't take any of these discounts for granted, as they may be included as standard, by request, or not at all. Check the small print and ask for advice, but always make sure you get any discounts you're entitled to.

 

5) Decide on a Deductible

Lastly, decide how much of a claim you can afford to pay yourself before an insurance payout kicks in. Setting your deductible value as high as possible will lower your premiums, and could save you plenty over the years to come. Of course, you'll lose out if you do need to make a claim, so the trade-off is your decision to make.

 

Once you've done all the groundwork, speak to an insurance agent to explore your options. A comparison site may get you lower basic quotes, while an agent might get you coverage that's more closely matched to your needs for the same price. An agent will also make sure all your paperwork is in order, and that your policy won't be invalidated by a simple mistake you've made on your application.

But whichever way you choose to finally buy your policy, you can now sit back and start planning the more exciting parts of your new chapter in life.