First-time home buyers often overlook regular expenses that can add up over time and impact the overall cost of a home. For instance, many new home buyers forget to factor in the cost of homeowner's insurance when they calculate the cost of owning a home.
For people who may not be as familiar with the way homeowner's insurance works, your lender will — at the very least — require you to get a minimal level of hazard insurance. Hazard insurance is NOT the same thing as homeowner's insurance. However, hazard insurance is usually part of a homeowner's insurance package. Think of it as a small portion of the overall homeowner's insurance plan.
Hazard insurance provides financial protection against damage and theft. Typically, hazard insurance covers fire/smoke damage, vandalism, electrical surges, damage from burst pipes, hail, heavy wind and various other types of damage. While this may seem like it covers all of the bases and offers enough coverage for your home, you will likely need to purchase a comprehensive homeowner's insurance plan.
Homeowner's insurance plans usually expands hazard coverage to include things like personal items, other structures on the property (like a shed, unattached garages or pool), furnishings and more. A typical homeowner's insurance plan also includes types of personal liability coverage. This will protect you in case someone is hurt on your property.
You may also need to purchase additional coverage if you live in an area that is prone to flooding, fire or earthquakes. If you have business equipment at your home, expensive art, antiques, jewelry or other valuables, you should consider buying extra coverage to make sure you have the coverage you need.
Make sure that before you purchase a policy, you know exactly what you are getting. You should always know what is covered and what isn't covered so you don't end up with any nasty surprises when you go to file a claim.
You should always shop around a bit before you settle on an insurance company. Compare prices and policies to find what works best for you. Select an agent you can trust. Read reviews, ask friends and family members — know what you're getting into.
There are a few things you can do that may help reduce your insurance premiums. Home alarms, smoke detectors and deadbolts can all potentially help you save on your homeowner's insurance.
While you should never wait too late to file a claim, you should also never file a claim unless you have to. Avoid filing for minor damages because that could mean an increase in premiums. The cost of your premiums is partially determined by your claims history.
When you DO file a claim, make sure you document everything. Take photos. Write down as much as you can. Make copies. Save receipts, make note of who you talked to and what they said, write down dates. Basically, if it has anything to do with your claim make a note of it.