{"id":3444,"date":"2016-04-16T15:06:38","date_gmt":"2016-04-16T15:06:38","guid":{"rendered":"http:\/\/teammovemortgage.com\/?p=3444"},"modified":"2020-07-13T22:33:17","modified_gmt":"2020-07-13T22:33:17","slug":"homeowners-insurance-tips-for-buyers","status":"publish","type":"post","link":"https:\/\/teammovemortgage.com\/blog\/homeowners-insurance-tips-for-buyers\/","title":{"rendered":"Homeowners Insurance Tips and Answers for Buyers"},"content":{"rendered":"

Homeowners Insurance Tips for Home \"tipsBuyers<\/h1>\n

Understanding Homeowners Insurance Options and Steps is Important<\/h2>\n

So you are looking at buying a home?\u00a0 Too many forget that when purchasing a house and a mortgage is involved, that it is so important to discuss homeowners insurance options with a knowledgeable insurance agent.\u00a0 This should be done very early<\/span> in the process and there is a lot more to discuss than just “What’s my payment?”.\u00a0 So let’s discuss some important topics about insurance.<\/p>\n

Homeowners Insurance Policy\u00a0Compared to a\u00a0Dwelling Policy<\/h2>\n

Many people not involved in the insurance business are not sure of the difference\u00a0between these two policies, but when buying it is important to know.<\/p>\n

Homeowners Policy:<\/strong>\u00a0\u00a0A homeowners insurance\u00a0policy is placed on a home that you own,\u00a0live in as your primary residence, and\u00a0the property is in\u00a0good\u00a0condition and meets certain requirements.\u00a0 If it\u2019s an old home such as pre-1970\u2019s, it would need to have been re-wired\u00a0and re-plumbed as well as\u00a0it must have a breaker box rather than the old fuse box.<\/p>\n

Dwelling Policy:<\/strong>\u00a0\u00a0A dwelling policy can be on a home that you own AND live in but the home may be older and\u00a0without modern updates such as updated wiring with a breaker box and modern\u00a0plumbing.\u00a0\u00a0Sometimes a buyer may buy a home that requires a dwelling policy and after making improvements, will switch to a homeowner’s policy to get better coverage.\u00a0\u00a0In most cases dwelling policies are written on homes that\u00a0someone owns BUT they do not live in the home, which in most cases are tenant\u00a0occupied homes.<\/p>\n

Important Rider available for Homeowners Insurance Policies<\/h2>\n

Water Back Up and Sump Overflow is an inexpensive rider available on Homeowner\u00a0policies.\u00a0\u00a0 If you had\u00a0a sewage back up into your home without this rider,\u00a0the insurance\u00a0would not pay for clean up.<\/p>\n

Important Rider available for Rental Dwelling Policies<\/h2>\n

If you are an owner of a rental property, then a very important rider for you to have on your dwelling policy is the Fair Rental Value rider.\u00a0 If the insured rents a home to a tenant and that home becomes uninhabitable due to damage from a covered peril, Fair Rental Value coverage reimburses the insured for the lost rent.\u00a0 Any expenses that do NOT <\/em>continue while the home (or that part of a home) is uninhabitable (e.g., electricity) are then subtracted from the fair rental value. The payment will be for the least amount of time necessary to repair or replace that home (or that part of a home) rented or held for rental to others.<\/p>\n

Replacement VS Actual Cash Value<\/h2>\n

If you own a rental property that was built after 1970 and is in good condition OR you\u00a0own a rental property that was built pre-1970 but has been re-wired and re-plumbed\u00a0and is in good condition then you want to make sure you have replacement coverage on your\u00a0home.\u00a0 Replacement means the insurance company does not depreciate.\u00a0 Actual cash\u00a0value means the insurance company DOES depreciate.<\/p>\n

Here is how a Claim Works for Replacement VS Actual Cash Value:<\/h2>\n

Replacement Claim:\u00a0\u00a0<\/strong>Once you claim and the adjuster works up the claim, the adjuster will first cut you a check\u00a0for Actual Cash Value of your loss.\u00a0 However, once you replace these items\u00a0with something similar and turn your receipts into the adjuster, then the adjuster will\u00a0cut you a check for the remaining monies it took for you to replace your loss, thus\u00a0putting you back in a similar position as before your loss.<\/p>\n

Actual Cash Value Claim:\u00a0\u00a0<\/strong>Works the same way EXCEPT once the adjuster cuts you a check for Actual Cash Value of\u00a0your loss then the claim is closed.\u00a0 You replace your loss as well as you can but the\u00a0insurance company doesn\u2019t cut you a check for the difference in between the actual\u00a0cash value and what it cost you to replace your loss.<\/p>\n

Tips to Save Money on Homeowners Insurance<\/h2>\n

Many people get the warm and fuzzies from having a low deductible on the homeowners insurance\u00a0policy. However \"Homeownersthe warm and fuzzies come at a price.\u00a0 It can be beneficial to consider\u00a0a higher deductible such as $2500. The difference between a $1000 deductible and a $2500 deductible can be as much as $300 a year in some cases, so by the time you have a claim\u00a0you may have saved enough money over the years to more than offset the amount of the deductible.\u00a0 Make sure that you thoroughly discuss the attributes of the house because some things such as a security system, recent upgrades, distance to a fire hydrant can make a difference in your premium.\u00a0 Also if you have multiple policies such as a car, boat, motorcycle, or others, it could give you a discount on your homeowner’s policy.\u00a0 Many people often purchase a homeowners policy and never look at it again.\u00a0 It is very important to review your policy with your agent every two or three years in order to see if changes need to be made.\u00a0 Homeowners policies come with automatic inflation protection so your coverage amount increases each year at renewal.\u00a0 Sometimes depending on the market your coverage may even need to be adjusted back down.<\/p>\n

How to Prepare for Closing<\/h2>\n

When you are in the process of purchasing a home that is being financed one of the requirements is giving the lender an Insurance binder as evidence that the home is insured effective as of the closing date.\u00a0 A good idea in this situation is to go ahead and put your lender and your insurance agent in contact early on in the process so the Agent is aware of the closing date, Mortgagee Clauses, coverage required, and the loan number.\u00a0 Failure in securing a homeowners insurance binder will delay your closing so if your lender and Agent are connected early in the game this process normally goes much smoother.\u00a0 Check out 10 Important <\/a><\/strong><\/span><\/p>\n

\"Robbie<\/a>
919-960-6801 office
910-840-0833 cell<\/a><\/strong><\/figcaption><\/figure>\n

Steps to be Ready for Closing<\/a><\/strong><\/p>\n

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The details in this article were provided by Robbie Norris with Farm Bureau Insurance, 109 S. Elliott Rd, Chapel Hill, NC 27514.\u00a0 Click here<\/strong> <\/span><\/a>to learn more about Robbie and his agency.<\/p>\n

Related Resources:<\/strong><\/p>\n