An unbiased guide to buying your first home

Real questions with honest answers

Answer

A: The best advice is to get a good insurance agent, generally an independent agent who is not selling the insurance of only one company. Again, look for one the same way as you looked for a real estate agent. Have the agent explain all the types of coverage and what might be best for you.

Many policies provide a fixed amount of coverage. If home values and the cost of repair and replacement have increased over the years you may be badly underinsured and not have enough to rebuilt or replace. So-called replacement value policies are more expensive but should be considered. If not review the amount of your insurance coverage every few years and increase the amount if called for.

Many hazards are not covered by the standard policy. The best examples are flood, earthquake and some environmental damages such as mold and pollution. If you live in a flood zone area consider buy special flood insurance. The same holds true for earthquake insurance although it is generally not available at a reasonable rate and generally has a very high deductible.

One way to manage your insurance costs is through the level of the deductible which is the amount you have to pay for each instance of damage before the insurer is liable. The higher the deductible the lower the cost of your insurance. You are, in effect, self-insuring for the deductible amount.

Every homeowner needs to have, not only casualty insurance (for damage to you house and contents) but also public liability insurance to protect you if you are sued for property damage, injury or death on your property or because of your property. For example a guest might trip and fall on a loose carpet and sue. Most people have very low public liability limits but additional limits cost very little more and given the size of damage awards it may be worth while to at least explore higher limits.

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