If you buy a home, you will probably have to insure it. Homeowners coverage can benefit large and small houses alike. It will prove instrumental to your security should accidents occur. Policies are so important because you can use them to cover repair costs, replace lost items or help other people following accidents in your home. Still, you have an interest in making sure you get the policy that is best for you. That will take some research. But, if you haven’t yet closed on a home you plan to buy, can you still get coverage? Do you have the right to do so?
Not only do you have a right to get a homeowners insurance quote before you buy, but also you should buy before closing. That way, you’ll have plenty of protection from the moment you take possession of the home. It might take some consideration, but you can get covered.
Why You Can Get Quotes Before You Buy
The home buying process is a long, detailed one. You will face quite a few legal and financial hurdles that you must clear before you close (take possession) of the new home. The reason it usually takes several days or weeks is because the sale of such an expensive, important asset needs to be one that occurs legally.
In most cases, one of the tasks at the top of your lists will be to get homeowners insurance before you move in. This isn’t usually optional. Instead, it is often one of the mandatory steps that any buyer must take. The reason typically has to do with whether you finance your home.
Insurance Requirements for Home Buyers with Loans
Most people take out mortgages or other financing to afford to pay for their homes. By doing so, they promise to repay the cost of this loan to the bank. For the duration of the home, the bank has a legal ownership interest in the home. Should the homeowner fail to repay the loan, the bank could repossess the home and evict the homeowner. Homeowners insurance exists in part as a way to help banks and homeowners prevent these issues.
In most cases, lenders require their home borrowers to carry at least certain types of homeowners insurance. Most will require applicants to present proof of coverage at the time they finalize the terms of the loan, or shortly thereafter.
A home insurance policy can ensure that the homeowner has a chance to maintain their responsibilities in the home. Should the home sustain damage, for example, the owner might have the funds available to repair and continue to occupy the home. Therefore, neither the bank nor the resident will lose their financial interest in the property. They can also reduce the risks that the homeowner will face a destroyed home, but still has a loan to pay off.
Therefore, you have an absolute right to get a quote on homeowners insurance before you finalize the sale of the home. Usually, you can collect ample information to get an adequate quote and finalize the terms of your policy.
Things to Remember When Getting a Quote
When it is time to get your homeowners insurance quote on the new property, you will have to keep some specific details in mind. Getting the right policy and limits will mean providing some very specific information to your insurer regarding the value of the home.
- Some lenders will require you to get certain policy limits. Therefore, your coverage must meet these stipulations, so tell your insurer about them as you work on the quote.
- To repair or rebuild your home, you will likely need to get structure insurance. More importantly, you will likely need to get enough of this coverage for the home’s replacement cost value. The replacement cost is the total amount of money you will need to rebuild a totally-destroyed home.
- Keep in mind, construction costs continue to change as the economy changes. In many cases they will rise over the lifetime of your house. Therefore, the initial replacement cost value of the home might change, and it could exceed your policy limits. Your coverage therefore might need to contain extra policy limits, like guaranteed replacement cost or extended replacement cost insurance.
- To determine the appropriate replacement value of your home, you will likely need to have a home appraisal. Some realtors provide this service, but professional appraisers usually have the best insight into the home’s full value. Please note, the replacement cost value usually is not the same thing as the home’s selling price or market value.
Don’t forget, your homeowners insurance can assist you with coverage for both your possessions and your liabilities in the home. You therefore get a lot more benefits than just the home’s replacement cost. Therefore, if you have coverage from the day you take possession of the home, you will have a lot of protection available.
Also Read: Protecting Your Family Before and After Flooding