The summer and fall are popular times for home buying, so they're also big months for new home insurance purchases and renewals. Long Island-based insurance agents offer five tips to consider.
Home value is different from replacement cost
Home insurance covers how much it would cost to rebuild the home, while the value of a property generally includes intangible things, such as the land and the quality of the school district, says Mike Walsh, a State Farm agent in Bellmore.
Insurance companies use a tool that estimates only how much it would cost to rebuild the home, Walsh says. For example, if you buy a home for $500,000, it might cost $400,000 to replace, he says. So, he says, you do not need $500,000 in insurance -- and higher premiums — if the bank asks for it. “Some banks will push you to insure it for the value,” Walsh says. “Many times, I have to fight with the bank on my customers’ behalf.”
Homeowners can also consider a replacement cost guarantee, which provides up to an additional 25 percent of insurance coverage in case there was something that was missed and the replacement cost is more than the homeowner is insured for, says Bob Platin, the owner of Supreme Agency in Holbrook.
Bundling is not just for cable TV, internet and phone, and most insurance companies will give you a better deal if you take out both home and auto insurance policies with them.
“It’s always better and cheaper to bundle home and auto together,” says Jim Basso, a Nationwide insurance agent in Huntington Station.
In some cases, with bundling, you can save up to 17 percent on auto insurance and up to 24 percent on home insurance, says Basso.
“That’s a really big savings you get on both sides,” Basso says.
Consider water and pet policies
Make sure your policy has water backup coverage, especially if you have a cesspool, as many standard policies don’t cover this, Platin says.
If you own a dog, you might also make sure you have adequate coverage in case it bites someone, as most homeowners’ insurance liability coverage doesn’t automatically include this, Platin says. Also, some companies don’t cover certain dog breeds, he adds.
Know what’s not covered — and what’s not
Fallen trees are the most common insurance claim, Basso says. Many homeowners don’t know that if the tree falls and doesn’t hit anything, like the house, a shed or a fence, there’s no coverage for cleanup and removal, he says.
Walsh notes that a lot of policies exclude tenants in liability coverage, so if you will be renting out an apartment in your house or on your property, make sure to add that to your policy in the event that the tenant is injured, he adds.
Start your search early
Generally, mortgage companies want proof of insurance before setting the closing date. “Make inquiries at least 30 days before and don’t just buy on price,” Basso says.