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Homeowners Insurance

Find a Reputable InsurerThe lender will require you to obtain a homeowners insurance policy prior to closing. This is to ensure that you and the lender are protected from both physical damage to the property and liability responsibility for damage or injury that you may cause others. It is a good idea to shop around for this insurance but do not necessarily go with the cheapest rates. You want to have a reputable insurer that you know will cover your claims. If you already have auto or life insurance, check with that company about getting a multi-policy discount.

Make Sure You're Covered
Be sure to ask whether you are receiving Actual Cash Value (ACV) or Replacement Cost Coverage. Replacement Cost Coverage means literally replacing damaged parts of your home or belongings with something of like kind and value. ACV insurance means reimbursing you for the replacement value minus depreciation. For example, a damaged refrigerator might cost $800 to replace with a new one but the ACV would be $800 minus depreciation for the number of years that you have owned the refrigerator. Obviously, replacement value gives you better protection, but the premiums will usually be higher and it is not always available.

Additional Coverage Options
As you accumulate personal property of value, you should consider having an endorsement added to your policy to cover items such as jewelry, a piano or collectibles such as baseball cards. Without an endorsement, most insurance policies contain limited coverage for personal property losses (for example, maximum of $1,000 dollars for all jewelry losses). You should also review your policy to add coverage for additions such as a pool, deck, enclosed carport or garage.

Get a Documented History of Claims for the Property
Earlier, it was mentioned that you might make your contract contingent on receiving a C.L.U.E. ® Home Seller’s Disclosure Report that would indicate any history of insurance claims for the property. C.L.U.E. ® (Comprehensive Loss Underwriting Exchange) is a copyrighted report available through ChoiceTrust that reports any insurance claims for the past five years but contains no personal information about the seller. A documented history of loss claims for an individual property might make it difficult or expensive to obtain homeowners insurance.

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