This article is a guest post by insurance expert Eric Phillips with Liberty Mutual Insurance. If you’d like to contact him for more information about home or other insurance, you can reach him at 520-719-6382 or eric dot phillips at libertymutual dot com.
When you buy a home, you need to obtain home insurance to protect your property. There are many things you need to know and many questions to ask when shopping for home insurance. If you don’t, you might miss out on important coverage that could prove costly if something happens. Here is a home insurance primer from an insurance expert.
Why should I shop around instead of just calling “my insurance guy”?
Your insurance guy might be great, but he might:
- Have only one or two options to offer you.
- Specialize in auto or other life insurance, but is not well versed in home insurance.
- Offer so many products that home policies are just an afterthought. He might take your order without any evaluation. That’s okay with french fries, but not with home policies.
Home insurance claims are rare. But even more than with auto insurance, there can be coverage that you thought you had, but didn’t. And didn’t know until it’s too late.
Insurance underwriters have to pick a base level of “what everybody would have” and then give customers a way to add specialized coverage from there. This works – as long as customers know what to request, or the agent is thorough. Hence you need to make sure you get your home insurance from an agent who is very knowledgeable and thorough.
What can I do to prepare for the home insurance conversation?
- Allow plenty of time to discuss replacement of your single largest asset. Set aside at least half an hour or more.
- Ask yourself if you own things your neighbor doesn’t. For example: a grand piano, baseball card collection, antique silver tea set. If the answer is yes, then there’s a chance that it is not covered. If the home insurance policy covers it, most likely only for a small amount that does not cover its actual value. Bring documentation and receipts for these items if you have them.
- Have a good sense of your financial health. Most carriers will base part of their rate on credit worthiness. Ideally, your lender will have already worked with you to optimize your finances and credit score in preparation for the loan.
- Get as many records and documents as you can for the house you consider buying. They will greatly help assess its risk profile.
What questions should I ask the seller about the home?
- What is the age of the roof? Documents to prove it are desirable. A permit record is ideal.
- What is the age of the electrical system? Documents, documents, documents! There should be a permit in public records.
- What is the age of the plumbing system? Again, paperwork is paramount.
- What is the age of the heating and cooling (HVAC) system? If the seller does not have this information, the home inspector can find it for you on the label on the system.
- What home construction and maintenance records can you give me? A binder with home records provided by the seller can save thousands in reduced rates.
What questions should I ask the agent about home insurance?
Pose a hypothetical claim scenario; Vacant home, burst pipe, flooded first floor. Their answer should thoroughly address each variable.
- Vacant, empty, or unoccupied? The difference is crucial.
- Failed plumbing system: Maintenance item – typically not covered.
- Flooded interior: This is covered, and should include a disaster response element.
See how thoroughly they answer the question and whether they can explain in terms you can understand. If they waffle, confuse you with complicated terminology, or patronize you, find somebody else.
What questions will the insurance person ask me?
- What kind of dogs do you have? Certain breeds and more than one pet makes a difference. You need to provide breed, length of ownership, and basic medical records (.e.g shots).
- How many kids do you have and how old are they? Just kids themselves present an increased risk.
Kids and dogs are darling, but a tad unpredictable. Kids under 12 combined with dogs present an increased risk.
What could prevent me from getting a good rate or from getting home insurance altogether?
- Polybutylene plumbing: Homes built between circa 1978 and 1996 use this grey plastic pipe in the plumbing system for the water supply. Polybutylene has a long history of failure and flooding homes. A few insurance carriers will cover a home that has it, but most will not.
- Swimming pools, hot tubs, and their enclosures: Their presence and setup affect the risk rating. They should have appropriate fencing at least 48” high with latches at 54”. Gates should swing out away from the water and be self-closing.
- Diving boards and pool slides: Almost all carriers consider this risk too high. Consider whether they are truly worth having.
- Trampolines: Another high-risk item that most carriers will not insure.
When do I start shopping for home insurance?
Contact a selection of insurance agents as soon as you have an address of a house that you are interested in. The agents will research the property to find out how it will insure. Things like location, age of structure, and prior claims will affect his quote. This information could be important to you when you consider whether you should make an offer.
What about flood insurance?
Flood insurance is essentially a topic for a separate article. If the desired home is in a rated zone, take heart. It isn’t a deal-breaker. The seller will disclose the need. Also, there are many more and better private options to the old-style FEMA flood insurance.
Now you hopefully understand just how important it is to get home insurance that is right for you and your new home. With the right home policy, you can sleep well at night, knowing that you are covered, no matter what life might surprise you with.