6 Tips to Gauge Your Home's Insurance Cost
We’re in the process of buying a home. The sale price is $225,000, but the insurance agent wants us to carry coverage for a property costing $285,000. Why do we need so much excess insurance – or do we?
When you buy a car the price you pay has a package cost, but if you add up the expense of separately replacing the brakes, motor and seats you will come up with a much larger number. The same is essentially true for real estate.
Property insurance is designed to protect homeowners against a variety of perils and the insurance company must be prepared to cover the cost if the entire house is lost. The replacement cost for the property is likely to be higher than the acquisition price of the home. However, it also should be said that the full replacement of the house is very unlikely and that an insurance company offsets this threat by providing coverage for a large inventory of homes.
Still, you likely want to go back to your insurance broker and ask several questions:
1. How much coverage do you really need?
2. Have your home inspected
3. Opt for a higher deductible and premiums will go down.
4. See if the property qualifies for special deductions for smoke detectors or other features.
5. You may be able to get a lower rate by combining a homeowner’s policy with auto insurance, coverage on a second home or both.
6. Shop around, and shop around often.
What's your real estate question? Email Peter Miller to get some answers at firstname.lastname@example.org