The Slide Guide to Homeowners Insurance for First-Time Home Buyers
The Slide Guide to Homeowners Insurance for First-Time Home Buyers
Shopping for homeowners insurance can feel overwhelming for first-time house buyers. But the process can be surprisingly simple. We’ve created this guide to help you feel confident that you have selected the right coverage for your new home.
The Best Time to Start Shopping for Insurance
You should begin shopping for insurance approximately 30 days before closing on a home purchase. If you are financing your home purchase, your mortgage lender will likely require proof of homeowners insurance coverage before you can close.
Proof of coverage can be in the form of your new policy’s declaration page, or a binder, which is a temporary contract between you and your insurer confirming you have purchased insurance coverage that becomes effective on the closing date.
Things to Consider When Comparing Homeowners Insurance Policies
Although price is often the first thing insurance shoppers look at, the up-front cost is only one factor of many you should consider.
Here are some things to look out for when choosing your coverage limits.
Primary Homeowners Insurance Coverages
Homeowners insurance is designed to protect you from financial losses due to various circumstances or events that can damage or destroy your home. Your policy will consist of several primary coverages.
Dwelling (Your House)
Dwelling coverage is the core component of homeowners insurance. It protects the physical structure of your home, including the walls, roof, floors, foundation, and built-in appliances like your furnace or water heater.
This coverage helps you repair or rebuild your home if it's damaged or destroyed by covered perils such as fire, windstorm, hail, lightning, or vandalism.
When selecting the amount of your dwelling coverage, you will want to ensure you have enough coverage to rebuild in the case of a total loss. This figure will be different from the house purchase price as it does not include the value of your land.
Personal Property (Contents/Your Belongings)
Personal property coverage protects you should your furnishings, clothing, electronics, or other items be damaged, stolen, or destroyed by covered perils.
The amount is determined as a percentage of the insured Dwelling value. Separate lower sub-limits exist for high-value items like jewelry, collectibles, or high-end electronics.
Personal liability coverage is crucial for protecting yourself against financial loss if you are held liable for someone else’s injuries on your premises—or for causing damage to someone else’s property. For example, someone slips and falls on your property, or your dog injures someone. This coverage can help pay for medical expenses, legal fees, and settlements.
As a rule, you’ll want to select a coverage level that matches or exceeds your financial net worth to fully protect your assets, especially from claims settled in court.
Loss of Use/Additional Living Expenses (ALE)
Suppose your family is displaced due to damage caused by a hurricane, fire, or other covered perils. ALE reimburses you for the increase in living expenses incurred by you so that your household can maintain its normal standard of living. These expenses might include temporary housing, meals, and other costs associated with being away from home, which can add up quickly if you need to relocate for an extended period. Slide offers this coverage standard with the option to customize the amount of coverage to your needs.
As with “contents” coverage, ALE is calculated as a percentage of your home’s insured value.
If your new home has a structure on the property that is not attached to the main dwelling, such as a detached garage, shed, or fence, you will need Other Structures coverage. The amount of coverage you choose will depend on the structure(s).
Other Important Factors
A deductible is the amount you are responsible for paying out-of-pocket toward a covered loss before your insurance coverage kicks in.
You will have a choice of deductibles listed as a fixed dollar amount or as a percentage of your home’s insured value. Having a higher deductible will reduce the amount you pay upfront in premiums, but you will pay more out-of-pocket if you have a loss.
Homeowners in Florida, South Carolina, and seventeen other coastal states also have a separate deductible for hurricane damages. You can learn more about hurricane deductibles here.
Consider the financial implications of your decision when deciding the deductible amount that is right for you.
Available Endorsements (Optional Coverages)
When comparing different insurance companies, look for endorsements for your unique risk, such as coverage for high-value items, sewer backup, or animal liability.
Endorsements are optional coverages that allow you to customize your insurance package further and reduce the potential for unexpected out-of-pocket expenses for losses not covered in your policy.
When researching insurance companies, be sure to review their financial stability ratings before purchasing a policy.
Will your insurer be there when you need them? Will they have the financial strength to cover all policyholders’ losses during a major disaster?
Slide insurance is rated “A/Exceptional” by Demotech, a leading analysis firm with 38 years of experience evaluating insurance companies’ financial stability.
The Different Types of Risk Inspections
As part of the home-buying process, you will come across several types of inspections.
After you have put an offer on a home, you may consider hiring a qualified home inspector to look for unsafe or questionable construction characteristics not noticeable to the untrained eye. The inspector will provide a detailed report on the overall condition of the house’s structure and systems, including the roof, electrical, HVAC, and plumbing. You can use this information to demand fixes for any defects uncovered in the inspection, renegotiate the purchase price, or back out of the deal entirely. A home inspection is not required for insurance but gives you great insight into the potential risks of the home.
Your insurance company may schedule a short inspection to look for risks that often lead to claims like faulty plumbing or old hot water heaters. The insurance company will provide details and send out their own inspector if they require this step.
Wind Mitigation & Four-Point Inspections
Wind Mitigation and Four-Point Inspections are insurance inspections used in coastal areas like Florida and South Carolina.
Wind Mitigation Inspections check for building attributes that protect the home from damage caused by strong winds, like roof shape, roof deck attachment, and hurricane shutters for windows and doors. Having a Wind Mitigation Inspection that shows your home is well protected from wind can result in major discounts or credits on your insurance premium.
Four-Point Inspections report on the condition of the roof, electrical, plumbing, and HVAC systems. This inspection is often required by insurance companies for older homes.
A house is the biggest purchase most families will ever make—and home insurance is the best way to help protect this investment.
There is a lot to consider when buying a homeowners insurance policy. Your goal when purchasing your first homeowners insurance policy should be to find coverage that gives you the best balance of price and financial security.
Our goal at Slide Insurance is to offer the personalized coverage options you want with the financial stability you need to give you peace of mind now and throughout your future journey as a homeowner.