Insurance Coverage You'll Need For Your First Home

When you buy your first home, you will naturally be excited about finally becoming a homeowner. However, while you are busy planning how you will decorate your new home and when you will have your family and friends over for a dinner party, you should also be looking carefully at the insurance coverage you will need. 

To make sure you have the proper coverage, here are the types of coverage that are crucial for first-time buyers.

Liability Coverage

This is extremely important coverage for your first home. Liability insurance will pay the medical expenses and property damage that you or another member of your family cause to someone else. 

 

This may include if your dog bites someone, or if your kids happen to break a neighbor's window. It will also pay your legal expenses if someone sues you after being injured on your property, which could keep you from being financially ruined.

Private Mortgage Insurance

If you make a small down payment when buying your home, your lender may require you to buy private mortgage insurance. This puts your lender's mind at ease, knowing you should be able to make your monthly mortgage payment. 

 

 

The good news is that you won't need to keep this insurance forever. Once you pay down your mortgage to less than 80 percent of your purchase price, this insurance can be canceled.

 

Flood Insurance

When purchasing home insurance, remember that most homeowner's insurance policies do not offer flood protection. Thus, if your home is located in an area that may be prone to severe flooding, you should consider purchasing flood insurance. 

 

If you don't and you sustain a major flood that causes severe damage to your home and possessions, you may be stuck trying to pay for your losses out of your own pocket.

 

Title Insurance

Finally, your lender may require you to purchase title insurance as you are buying your first home. 

 

Remember that until you actually close the deal on your home, there is always the chance issues could arise regarding the home's title; especially if it is discovered the property has liens against it of which you were not aware. Should this happen, you may be very glad you have title insurance to help with the matter.

 

Whether it's insurance coverage you need while buying your first home or after you are officially a homeowner, knowing you have the right types of coverage will always provide you with plenty of peace of mind along the way.

A Flood Of Financial Risk For Homeowners

A guest post by Mike Bowman of TheQuarterRoll.com

When you review your monthly budget you may be putting money aside for items such as groceries, rent, clothing, and your gym membership, but have you ever listed flood damage on your budget? According to a spring 2010 edition of the Western Pennsylvania AAA Motorist magazine, flooding is the most prevalent natural disaster and you are 3 times more likely to be affected by flooding then fire. We certainly hear about the overwhelming flooding troubles in Tennessee, Kentucky, and Mississippi, but flooding comes in all sorts of intensities.

Except for vehicles with "comprehensive" insurance in their policy, flood damage is not part of any typical insurance coverage, and everyone is at some level of risk of financial loss due to flood damage. You can be the most financially conservative person, but one flash flood could severely harm you, financially speaking, when you consider that the average flood damage claim is $33,000.00. Most people will not have that much money set aside, even before a natural disaster hits. Also, nearly all disaster relief money is considered a loan and must be paid back to the issuing authority. Flood insurance, purchased through the National Flood Insurance Program is one of the best ways to insure yourself against the financial risk that flooding presents.

Why should you be concerned about flooding? Here are facts found from FEMA's and the CDC's websites:

-Only flood insurance will cover flood damage.

-25% of all flooding claims come from moderate to low risk areas.

-You do not need to be next to a body of water for flooding to occur on your property.

-Melting snow / poor drainage / deteriorating natural or man-made barriers are just a few of the least expected sources of flooding.

-All 50 states have been affected by flooding.

-While risks vary, we all live in a flood zone, according to www.FloodSmart.gov.


Considering buying flood insurance? Keep an eye on what is going on with this program. Flood insurance is issued by the National Flood Insurance Program and funding must be approved by Congress. Currently, funding for the National Flood Insurance Program is scheduled to stop in September 2011.

From the Insurance Information Institute

In the absence of any legislative agreement between the House and the Senate on funding the program for the long term, the NFIP was reauthorized for short periods of time under a series of continuing resolutions that extended funding for many different programs. After allowing the program to lapse four times, during which new policies could not be issued, leaving homeowners without the option of buying coverage and delaying thousands of real estate closing per day in flood-prone regions, in September 2010, as the last extension was close to its expiration date, both the House and the Senate extended the program for one year to September 30, 2011. Insurers hope that during this longer extension period Congress will take time to make significant and long-term changes in the program. http://www.iii.org/issues_updates/flood-insurance.html

About The Quarter Roll

Mike Bowman writes for TheQuarterRoll.com, whose website and magazine help readers get a quarter more for every dollar by providing personal finance tips, advice, and stories in an easy to understand and entertaining format. The tips and stories found in TheQuarterRoll.com are designed to give readers the ability to earn more, save more, and get more value for their money.

What is Flood Insurance and How Do I Know If I Need It?

It's that time of year again when the home insurance policies are due for renew. I got my homeowners policy and in a couple of months the flood insurance policy will follow. My mortgage company requires me to have flood insurance because my home is in a flood zone. It's a good idea because your home owners policy does not cover damage by rising waters. I'll probably never use it but I sleep better knowing it's there.

With hurricane season approaching it's better to be prepared. Some people make the mistake of thinking damage caused by rain and wind from a hurricane are covered by the homeowners policy. Many people in New Orleans made that mistake when hurricane Katrina came through.

So, if your lender doesn’t require flood coverage that obviously doesn’t mean you are safe from flood risk completely. Every home is at some type of risk for flood damage. So, how do you know what type of risk zone your home is in?

Your best bet is to visit the FEMA Flood Insurance website FloodSmart.gov and Safety.com for more information. They have a flood risk profile tool where you can type in your address and assess the flood risk of your home: FEMA Map Service Center. The results page will also show average flood insurance premiums in your area.





Don’t want to take their word for it? FEMA also offers online flood maps which are used to determine flood risk for each property. You can visit the FEMA flood map for your property to see exactly where the flood zone lines are drawn in your neighborhood.

These maps are only estimates of your home’s flood risk and should not be taken too literally. Many homes that are in “low risk” zones may experience a significant flood at some point- so it is always a good idea to purchase some flood coverage if you want to be completely protected.

In the event of a disaster, a home inventory can be your greatest asset. If your home is lost in a covered peril, your first call will be to your home insurance agent and your task of proving what was lost will begin. Will you remember everything you owned after it is gone? Especially in a time of crisis? Having a pre-established home inventory will take the headache out of that task- leaving you to focus on more important things.

Here is a checklist you can download to catalog all your belongings.

Download as Microsoft Word (261KB) 

Download as Microsoft Excel (47KB)

It's also a good idea to get out the video camera and do a room by room video inventory of your belongings. Be sure to open all the closets and record video of all your clothes, shoes, coats, and stored items. Get pictures of all special items like computers, electronics, tools, jewelry, etc. Be sure to note model numbers on expensive items.

If you have an iPhone, there's an App for that. Check out MyHome Scr.APP.book over at iTunes.