Brampton Real Estate Blog

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Wednesday, June 12, 2013

Essential insurance tips for first time home buyers

(NC)—From mortgage approval, to making an offer, to paying closing costs, buying your first home is both exciting and scary. At the top of this list, for example, is home insurance. Not only will insurance protect you should anything happen to your home or its contents, but it is also necessary to secure a mortgage.

“First time home buyers can become overwhelmed with all the steps required to purchase a home and often need to make a quick decision about home insurance,” says John Jenner, vice-president of marketing and communications at Western Financial Group. “But a quick decision might not be the right decision and first time buyers should be aware of the important choices they need to make.”

As a starting point, here are three concepts that first-time home buyers should understand:

All Perils vs. Named Perils. A named perils policy provides protection against hazards or events, such as fire or vandalism, which are specifically listed on your policy. Named perils policies are usually less expensive, but you run the risk of being struck by a calamity that isn't on your list. An all perils policy will cover you against everything expect perils that are specifically excluded in your policy. Check over your insurance policy to ensure that you have adequate coverage, and consider taking safeguards, such as installing a sump pump, to prevent disasters that aren't included in your policy.

Contents Insurance. Your insurance policy will likely cover more than just your home, it will cover your possessions as well. There are two typical types of coverage that apply to the contents of your home: actual cash value or replacement cost. The actual cash value coverage will reimburse you for how much your possessions were worth when they were lost or damaged. For quickly depreciating items such as TVs or computers, you may not receive enough money from your insurance claim to actually replace the item that was lost. If you have many items that have depreciated quickly, but you would be forced to replace if disaster struck, you should consider a policy that covers the actual replacement cost of your possessions.

Loss of Use. Make sure you understand the loss of use section of your insurance policy. It outlines the living expenses you'll receive should you be forced to leave your home because of a disaster. It often will cover your increase in cost of living while you are displaced from your home.
“Every first time home buyer needs to understand their insurance policy to make sure it is right for them,” Jenner continued. “And they should also understand the changes they can make to their home, such as installing an alarm system to lower their insurance premiums. Spending some time now to know how your policy protects you can save you headaches and confusion later should a disaster strike.”

More information is available online at

For more information on this and other home ownership topics, please contact me at 905-796-8888