(NC)—From mortgage approval, to making an offer, to
paying closing costs, buying your first home is both exciting and scary.
At the top of this list, for example, is home insurance. Not only will
insurance protect you should anything happen to your home or its
contents, but it is also necessary to secure a mortgage.
“First time home buyers can become overwhelmed with
all the steps required to purchase a home and often need to make a quick
decision about home insurance,” says John Jenner, vice-president of
marketing and communications at Western Financial Group. “But a quick
decision might not be the right decision and first time buyers should be
aware of the important choices they need to make.”
As a starting point, here are three concepts that first-time home buyers should understand:
All Perils vs. Named Perils. A named
perils policy provides protection against hazards or events, such as
fire or vandalism, which are specifically listed on your policy. Named
perils policies are usually less expensive, but you run the risk of
being struck by a calamity that isn't on your list. An all perils policy
will cover you against everything expect perils that are specifically
excluded in your policy. Check over your insurance policy to ensure that
you have adequate coverage, and consider taking safeguards, such as
installing a sump pump, to prevent disasters that aren't included in
your policy.
Contents Insurance. Your insurance
policy will likely cover more than just your home, it will cover your
possessions as well. There are two typical types of coverage that apply
to the contents of your home: actual cash value or replacement cost. The
actual cash value coverage will reimburse you for how much your
possessions were worth when they were lost or damaged. For quickly
depreciating items such as TVs or computers, you may not receive enough
money from your insurance claim to actually replace the item that was
lost. If you have many items that have depreciated quickly, but you
would be forced to replace if disaster struck, you should consider a
policy that covers the actual replacement cost of your possessions.
Loss of Use. Make sure you
understand the loss of use section of your insurance policy. It outlines
the living expenses you'll receive should you be forced to leave your
home because of a disaster. It often will cover your increase in cost of
living while you are displaced from your home.
“Every first time home buyer needs to understand
their insurance policy to make sure it is right for them,” Jenner
continued. “And they should also understand the changes they can make to
their home, such as installing an alarm system to lower their insurance
premiums. Spending some time now to know how your policy protects you
can save you headaches and confusion later should a disaster strike.”
More information is available online at www.westernfinancialgroup.ca.
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