Serving Idaho, Utah, and Wyoming

Talk to an expert:  208-522-5151   |

Navigating Home Insurance for First-Time Homebuyers

by | Feb 10, 2022

Embarking on the Journey of Homeownership

Congratulations on your decision to buy a home! Homeownership is a significant milestone; there’s so much to look forward to as you make your house a home. However, with this new chapter comes added responsibility, and one of the most critical aspects of homeownership is having the right insurance coverage to protect your investment. In this blog post, we’ll guide you through home insurance and share some essential tips and insights to ensure you have the coverage you need.

Understanding Home Insurance: Covering the Basics

Before we dive into the details, let’s start with the basics of home insurance. A standard home insurance policy typically consists of several types of coverage, each designed to protect different aspects of your home and belongings.

  • Dwelling Coverage: Protects the structure of your home and any attached structures, such as a garage, in the event of damage or loss due to covered perils.
  • Other Structures Coverage: Protects detached structures on your property, like a shed or detached garage.
  • Personal Property Coverage: Covers your personal belongings, such as furniture, appliances, and clothing, against damage or loss due to covered perils.
  • Loss of Use Coverage: Helps cover additional living expenses if your home becomes uninhabitable due to a covered loss.
  • Personal Liability Coverage: Protects you and your family members against liability claims resulting from injury or property damage to others.
  • Medical Payments Coverage: Helps cover medical expenses for guests injured on your property, regardless of fault.

The Importance of Adequate Liability Coverage

One aspect of home insurance that many first-time homebuyers may overlook is the importance of having adequate personal liability coverage. This coverage protects you and your family from the financial burden of potential lawsuits resulting from injuries or property damage to others. To illustrate the importance of having sufficient liability coverage, let’s take a look at a couple of real-life examples:

  1. A homeowner’s dog bites a neighbor, resulting in severe injuries that require multiple surgeries and ongoing rehabilitation. The neighbor’s medical bills and lost wages quickly exceed $300,000.
  2. A visitor slips and falls on an icy walkway at a homeowner’s property, suffering a traumatic brain injury. The visitor’s medical expenses, long-term care, and lost income amount to over $1 million.

In both cases, having at least $300,000 in liability coverage and a $1 million umbrella policy could help protect the homeowners from significant financial loss. These examples demonstrate that even though such incidents may seem unlikely, preparing for worst-case scenarios is essential.

Working with Loan Officers and Realtors for a Smooth Closing

At Page Insurance, we understand the importance of working closely with your loan officer and realtor to ensure a smooth closing. One essential document that loan officers often request is a “binder,” which proves your home insurance coverage. We’ll work with your loan officer to provide the necessary binder, ensuring all the required coverage is in place for a seamless closing process.

Home Warranties vs. Home Insurance

It’s crucial to understand the difference between home warranties and home insurance. While home insurance covers damages to your home and personal belongings due to covered perils, a home warranty is a service contract that covers the repair or replacement of essential home systems and appliances that break down due to normal wear and tear. Home warranties can provide added peace of mind, especially for first-time homeowners who may not be familiar with their new home’s maintenance and repair needs.

Common Insurance Mistakes to Avoid

First-time homebuyers can sometimes make mistakes when it comes to home insurance. Here are some common pitfalls to avoid:

  1. Not scheduling high-value items: If you have expensive items such as jewelry, artwork, or collectibles, you may need additional coverage, known as “scheduling,” to ensure they are adequately protected.
  2. Not getting enough liability coverage: As discussed earlier, adequate liability coverage is crucial. Consider at least $300,000 in coverage and the possibility of an umbrella policy.
  3. Not understanding that flooding from the outside is usually excluded: Standard home insurance policies typically do not cover flooding from external sources like heavy rain, snowmelt, or irrigation water. You may need separate flood insurance for such events.
  4. Not being aware of policy limits and exclusions: Take the time to review your policy thoroughly with your agent to understand any limits or exclusions that may apply.
  5. Not considering term life insurance: Term life insurance can provide financial security for your family in the event of your untimely passing, helping to pay off the mortgage and other expenses.

Interesting Home Insurance Statistics

Now that we’ve covered the importance of adequate liability coverage let’s look at some interesting statistics related to home insurance. Please note that these figures are just averages, and many claims can be much higher. When considering your insurance coverage, preparing for worst-case scenarios, not just averages is essential.

  • Approximately 1 in 20 insured homes annually have a liability claim (Insurance Information Institute).
  • According to the Insurance Information Institute, about 6% of insured homeowners file a property damage claim yearly.
  • Approximately 98% of personal liability claims are due to dog bites, slip-and-fall accidents, and defamation (Insurance Information Institute).
  • The average cost of a dog bite liability claim is around $$45,000 (Insurance Information Institute).
  • A study by CoreLogic found that 60% of homes in the United States are underinsured by an average of 20%.
  • Fire and lightning claims are less frequent but tend to be the most costly, with an average claim cost of around $75,000 (Insurance Information Institute).
  • In a recent survey, 85% of homeowners said they understood their insurance coverage, but only 30% could correctly answer basic questions about their policies (Insurance Information Institute).

We’re Here for You!

Navigating the world of home insurance as a first-time homebuyer can be overwhelming, but with the proper knowledge, you can protect your investment and enjoy peace of mind in your new home. 

Ready for a quote? Click here.

John Page, President of Page Insurance, has been a driving force in the insurance industry since 1998. As a licensed agent in Property & Casualty, Life, and Health insurance, John has won numerous awards for agency management and works tirelessly to improve agency operations with the client in mind. He is passionate about building and investing in the Page team of experts, ensuring they deliver top-notch service to clients. In his free time, John enjoys snowmobiling, gaming, reading, traveling with his wife and three kids, and cheering on the local Idaho Falls hockey team. His family and passion for sports bring joy and balance to his life.