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What first time home buyers need to know about home insurance

There are many components to purchasing a home for the first time. This could include getting a mortgage pre-approval, working with a realtor and finding a real estate lawyer. BrokerLink brokers can take care of finding the right home insurance for first-time home buyers. Home insurance is important because when the unexpected happens, such as a flood, the result is often costly. The right insurance could help handle such expenses. Here’s an overview of information a broker needs from first-time home buyers to provide a home insurance quote and the types of home insurance coverages.

Information needed for a home insurance quote

To insure a home, here is the information a BrokerLink broker will need:

The possession date

The possession date is typically when the home buyer takes legal possession of their home. This is an important date for the broker to know because it could impact their insurance rates.

Name on the property title

A person’s ownership of a property is referred to as the “title” – this is usually the name of the home buyer. It’s also important for a broker to know because if there are two people on the mortgage title, it could impact the insurance rate.

Prior insurance history

A broker will need to know if it is the home-buyer’s first time applying for insurance, how many years they’ve had insurance (if it all) and claim made in the last 10 years (along with the reason for the claims).

Information to determine cost to rebuild

If an event occurred where a home needed to be rebuilt, such as a fire, it’s important the home buyer has the right amount of insurance coverage – so when a claim is made, they will have enough funds to help with the rebuild cost. To help establish the rebuild cost for a home, a personal insurance broker will also ask about the year the home was built, siding material, roof material, square footage, plumbing and electrical materials, and home updates (such as renovations).

Common home insurance coverages

Here are some of the “must-have” coverages when it comes to home insurance:

Sewer back-up and overland water coverage

Where a homeowner lives will determine whether they are eligible for overland water coverage or sewer backup coverage. A BrokerLink broker will be able to determine the homeowner’s eligibility.

Sewer backup occurs when a large volume of water overloads a home’s drainage system. If this occurs, sewage or debris could enter the home, which is a health concern. If a homeowner is eligible for the coverage, sewer backup insurance could help with handling damages to the home.

If there is an overflow of lakes or rivers or severe weather causing heavy rain, water levels could rise and flood homes. Overland water coverage could help eligible homeowners handle costs to repair damages.

Personal liability

Home insurance policies contain personal liability coverage. This coverage helps if a homeowner is being held responsible for bodily injury or property damaged caused to a third party. For example, if someone slipped on a homeowner’s walkway, the homeowner could be sued if the person was injured. Should this occur, personal liability insurance could help with legal fees, if there was a lawsuit.

Guaranteed building replacement cost

Guaranteed replacement cost coverage could help pay for the replacement of a home – reductions in the home’s value over time will not be taken into account. For a homeowner to be eligible for the coverage, the home most be insured for no less than 100% of its value. Additionally, if the homeowner is planning any improvements, they must notify their broker or insurance company within 90 days of the start date. All of these measures ensure a home’s value is current and up to date.

Single Limit

Single limit coverage is the total value of the home, detached structures (i.e. a garage) and personal property. If there was a sudden loss, single limit is the maximum amount an insurance company would pay out for a one time insured loss.

Optional insurance coverage

In addition to “must-have” coverages, here are some optional coverages which can also help first-time home buyers when the unexpected happens.

Identity theft coverage

If a homeowner’s identity is stolen, which could be by credit card fraud, it could be costly to restore. Identity theft coverage could help with expenses to reclaim an identity, such as providing funds for legal fees.

Home equipment breakdown coverage

Home equipment breakdown coverage could help cover costs to replace mechanical equipment, such as a furnace fan, if it breaks down. The amount of coverage and the types of scenarios which will be covered will be dependent on the policy; a BrokerLink broker can help explain these limitations.

Service line coverage

Service line coverage could help the homeowner handle the cost to repair damaged exterior water or sewer lines.

How BrokerLink brokers can help

Finding the right home takes time and resources. Our brokers can help homeowners take care of getting the best insurance for their needs. Homeowners can contact a BrokerLink broker to get an insurance quote started and to learn more about their home insurance.