Home Buyer Tip - Home Insurance

Unless you pay cash for your home, you'll need a valid homeowner's insurance policy before you close on your mortgage. The policy will protect you and the lender from:

• Casualty, like fire, wind or hail – damage to the structure of the house. For flood prone areas, you may need a separate flood policy.
• Liability in case a visitor is injured at your home.
• Personal property coverage for damage to things like your furniture, clothes or appliances.

Types of Structural Insurance

1. Replacement Cost: The cost of replacing damaged property with no depreciation deduction but with a maximum dollar amount.
2. Guaranteed Replacement Cost: Full cost of replacing damaged property with depreciation deduction or a maximum dollar amount.
3. Actual Cash Value: An amount equal to the replacement value of damaged property minus a depreciation allowance.

Make sure you have enough insurance to rebuild your home if it were destroyed. Think about:

• Local construction costs
• Square footage of the house
• Type of exterior construction, like brick or frame
• Style of house
• Number of rooms and bathrooms
• Type of roof
• Special features like a garage or fireplace

Saving Money on Insurance

• Shop around. Compare price and quality of service. Ask your family and friends. Check with Standard & Poor's or AM Best.
• Increase your deductible. The higher the deductible, the more you save. But don't get a deductible that would be too much for you to pay.
• Consolidate your insurance. Buy homeowner's and car insurance with the same company. You'll usually get a discount of up to 15%.
• Look at the age of your home. The newer the home and equipment, the lower the insurance costs. Construction resistant to wind and earthquake damage will also lower rates.
• Don't insure the cost of the land under your home.
• Be safe! Install smoke detectors, security systems and dead bolts. Safety features can lower insurance.
• Quit smoking. Some companies offer reduced rates for nonsmokers.
• Flaunt your age! If you're over 55 say so. Senior citizens can get discounts
• Get group coverage. Try your college, credit union or business associations.
• Stay with your insurance company. Some companies reward loyal clients with reduced premiums.