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How to Choose a Home Insurance Policy for the First Time

There is no doubt that purchasing your first home can be an overwhelming process. The endless stream of paperwork and documentation is not nearly as fun as finding the home of your dreams, but it is a very important part of the process. For first time homeowners, this may be the most important purchase of your life so far. This is why it is so critical to protect your investment by carefully choosing the best home insurance policy. Every home is different and coverage needed will vary from person to person. Performing the proper research before deciding on a policy is crucial 

Read to learn important tips that are necessary to consider when you are searching for the right home insurance policy for you. 

Shop Home Insurance Policy in South Dakota

For starters, it’s important to begin to shop around for home insurance in the beginning of the home-buying process rather than waiting til the last minute. Even though you technically do not own the home until closing, mortgage companies will typically want evidence of insurance ahead of time. Not having insurance ready could potentially delay your closing date. 

Doing proper research ahead of time will also give you the ability to develop a sense of what the going rates are as well as explore various coverage options in order to find the most suitable home insurance company that aligns with your needs. 

Understand Various Home Insurance Policy in South Dakota

When you are looking at multiple insurance companies, it’s important to understand the different types of homeowner insurance policies available. The options have names such as HO-1, HO-2, HO-3, all the way up to HO-8. Each of these policies cover different things. For example, HO-2 is a plan that covers a list of specific problems including fires, smoke, theft, vandalism, hail, and more. It’s crucial to review the entire list in the case that you would like to have coverage beyond just these specific problems. The best plan is to discuss these options with an agent who can ultimately help you decide which choice is best based on your specific needs. 

Understand How Much Homeowners Insurance you need in South Dakota

There are various factors that will impact the amount of insurance you will need for your home. The policy you choose will cover your property and belongings in one of two ways: actual cash value (ACV) or replacement cost value (RCV). Replacement cost value considers the current market value of how much it would cost to replace something, whereas actual cash value only reimburses you based on the current age and condition of the value that has been damaged. 

The amount of coverage you need will depend on a variety of factors such as the size of your home, your location, the type of construction and any other structures on the property. Additionally, it’s important to keep your personal belongings in mind since they will be covered by your policy as well. Creating an inventory list will make it much easier to file a claim, especially for more expensive items like electronics or jewelry. 

Decide if you want to bundle 

Bundling is an available option that will lower your home insurance premiums. Many insurance companies offer multi-policy discounts, making it a good idea to check places where you currently carry life insurance or other types of coverage. However, it is important to remember that just because you carry insurance with a company does not always mean they will be the best company to provide you with home insurance. Remember to still ask questions and continue to consider other providers during your research process.

Know what the policy does not include

Always be aware that there will be certain risks and events that homeowners insurance may not cover. For example, standard policies typically do not cover floods or earthquakes. Therefore, if you are in an area that is prone to these types of disasters, you will need to further consider getting separate insurance for that type of coverage. 

There are a majority of policies that will often include coverage for items like computers, firearms, and jewelry, but it is always smart to review and confirm the limits your policy includes for these types of additional items. If you are working with an independent insurance agent, you get the opportunity to discuss with them what exactly you are purchasing. The overall goal is to find a good policy that will cover your individual needs in the event of a claim. 

Understand the difference between market value and replacement value

Knowing the difference between your home’s market value and its replacement value is crucial when it comes to determining how much coverage you want to pay for. Market value is the amount that you can sell your home for, which takes into consideration factors like the size of the property, the school district, and more. On the other hand, replacement value is the cost to rebuild your home back to its “pre-loss condition” using similar materials with the same quality. For instance, if your home is destroyed by a fire, you will need to rebuild it. 

Find the right balance between price and protection

One of the main goals when shopping for home insurance is to find the right balance between price and coverage. Even though one price might be the lowest, the coverage may not always equate to the best purchase. Be sure to do proper research and do not be in a hurry to buy just because you see a low price. 

Choose a Trusted Independent Insurance Agency in South Dakota

Meyer Insurance promises to protect you from life’s unexpected twists and turns. We understand how important your family, business and possessions are, and have the experience to navigate the unique risks you may face. 

We have two office locations in Watertown, SD, and Webster, SD. Our agents are ready to assist you with all of your insurance needs. If you are interested in learning more about our independent insurance agency, contact us today to speak with one of our professionals. 605.753.5698