Buying a Home? What You Need to Know About Insurance

Posted by EdmontonRealEstate.ca Team on Monday, April 9th, 2018 at 9:36am.

Everything You Need to Know About Home InsuranceHome insurance helps protect homeowners from financial liability when their property is damaged. While home insurance policies may vary, many insurance policies cover disasters like fire, lightning strike, vandalism and theft, and home buyers who are about to purchase a home often spend time exploring their home insurance options to get the best deal for their money. Understanding the need for home insurance and the different kinds of home insurance can help home buyers decide what type of insurance is right for them.

Mortgage Lenders Require Home Insurance

Many home buyers will begin their search for home insurance by asking whether or not it's a requirement. Homeowners are not required by law to have home insurance, but mortgage lenders require borrowers to take out a home insurance policy when they buy a home. This protects the mortgage lender's investment while the borrower is repaying the loan.

Insurers Offer Different Types of Home Insurance

In general, home buyers may choose one of three different types of insurance policies. A comprehensive policy covers everything except what is specifically excluded in the contract. This type of policy is usually the most expensive and offers the most protection for homeowners.

Buyers on a budget can scale back their policy to a basic policy. This type of policy only covers what is explicitly listed in the contract. Basic policies offer the least protection but allow homeowners to save money.

Those buyers who want to save money but who would like more coverage than what is offered in the basic policy can choose broad coverage, which offers coverage at mid-range price.

There Are Many Ways to Save

There are many ways that home buyers can save money on home insurance. It helps to shop around. Some home buyers start by contacting an insurance broker instead of calling insurance agencies one at a time. Insurance brokers work with different insurance companies to get the best quotes for their customers.

A credit check is not required for a home buyer to qualify for insurance, but a home buyer with a good credit score is more likely to qualify for a good insurance rate. Buyers who know they have a good credit score can ask the insurance company to run a credit check.

Damaged Properties May Need a No Frills Policy

Some properties are simply too damaged to qualify for a standard home insurance policy. For these properties, a no frills policy is usually the solution. These policies, like basic insurance, only cover what is named in the policy. They are designed to put more risk on the homeowner than basic and other types of insurance coverage. A no-frills policy is usually the type of policy that a home buyer must get if the home is severely damaged in some way.

Talk to an Insurance Agent to Find Out More

Home buyers who have made an offer on a home and who wish to get started purchasing an insurance policy can get started by contacting an insurance agent in their area. Working with an insurance agent helps home buyers get the coverage they need in order to take out a loan when the time comes. For a qualifying Stony Plain home, the insurance agent should be able to quote a price for comprehensive, basic and broad insurance. The agent can also answer home buyer questions about insurance coverage.

By Justin Havre

 

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