Insurance Tips for First-Time Homebuyers

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Buying your first home is a major decision that can be both exciting and stressful. There are many variables that some may not consider during the process, however. One important–often underestimated–aspect of home buying is homeowners insurance. We’ve put together a few tips on how best to navigate the insurance process for homes. 

1. Research Before You Buy

Before buying a house, you should do some research into what risks might be associated with the property. There are many different factors that affect the premium of homeowners insurance, such as risks of natural disasters, local crime rates, distance from first responders, and the overall home condition–to name a few. 

Homebuyers can dig into some of these factors by looking into the various government resources. Doing some initial research can help give you an idea of possible risks associated with a home you’re considering for purchase. We’ve listed a few resources below. 

Another piece of the insurance puzzle is the local fire department’s ability to respond to fire emergencies. A company called ISO (Insurance Services Office) creates ratings for fire departments and their surrounding communities. To measure the fire readiness of a community, insurers look to ISO ratings, which are determined using factors like the water supply and emergency communication system in a specific area. The highest rating an area can receive from ISO is a 1, and the lowest is a 10. The lower the rating, the more prepared the fire department is. 

Your home does not have its own unique ISO fire department rating; the area in which it is located does. This means that you and your immediate neighbors should have the same ISO fire rating.

Further, your area’s ISO rating is only given to your local fire department and insurance companies. It is typically not released publicly unless the fire department decides to announce it. Some fire departments will provide your area’s rating if you give them your ZIP code, but they are not required to do so and may deny your request when you contact them.

2. Know Differences Between Replacement Cost & Market Value

Your insurance will traditionally be based on the replacement cost of your home. Replacement cost is the cost to rebuild your home with similar types and quality materials. You’ll want to be sure that this amount is enough to cover a total loss. A market value policy only covers up to the current cash value of your home. The cost of clearing debris and rebuilding your home will most likely be greater than its cash value, so a market value policy will only cover a portion of these expenses.

3. Fill In Coverage Gaps

Every policy has exclusions, and it’s important to fill in coverage gaps that can affect your unique needs. For example, flood, earthquake, and backup sewer damages aren’t typically covered in a standard policy. If you’re anticipating any of these issues, it may be wise to add additional coverage.

You also may want to consider adding extended replacement cost coverage for your dwelling or an umbrella policy for liability coverage. These broader policies set a limit above the amount of coverage you receive from your typical homeowners policy.

4. Bundle Up To Save Money

Often, insurance companies will offer a discount on one policy if you also purchase additional policies, such as auto or life insurance, with their company. This practice is called bundling and can potentially help you save money on your premium.

5. File Thorough Claims 

Filing a claim is an essential step to recovering from a loss. And there are many things you can do to create an easier and more effective claims process. First, keep good records. Document important conversations and save receipts and contracts. Also, keep a good inventory of your home—you can even use an app or a website to keep track of your items digitally.

When the time comes to report a claim, be sure you have all of this information plus other specifications about your home on hand and ready to pass along. Then, file quickly. Insurance providers have varying amounts of time allotted to report a claim. Be sure to file within these time limits to ensure that your loss is covered.

6. Review Policy Annually

Review your policies every year. Changes to your home and even your neighborhood can raise or lower your premium. If you’ve made an addition to your home, such as a finished basement or swimming pool, you’ll want to increase your coverage so that, in the instance of a large property or liability loss, you’re not underinsured.

On the other hand, if risks have been reduced, your premium could decrease. Additions to your home, such as a new roof, burglar alarm, fence, or pool cover, can reduce risk and potentially lower your premium.

7. Consult An Insurance Agent

To fully determine what your coverage options are, you should speak with a professional insurance agent. The agent will review the home, location, and your background to make a policy recommendation. 

Note To Client: We are not exactly sure about what the compliance would be mentioning/promoting Breda Insurance in an article that would live on the Bank’s News page. With that in mind, the following paragraphs are an alternative article ending for tip number seven depending on what is or is not compliant. 

7. Consult An Insurance Agent

To fully determine what your coverage options are, you should speak with a professional insurance agent. The agent will review the home, location, and your background to make a policy recommendation.

Breda Insurance knows how to help homeowners find the right coverage for their investment. Insurance policies with Breda include coverages for the dwelling, other structures, personal property, additional living expenses, and liability. We also have you covered for a variety of personal insurance needs that may help you bundle and save. 


For more information about Breda Insurance’s homeowner coverage, visit BredaSavingsBank.com/Insurance/Personal-Insurance.

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