Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” Though no one sets out with failure as the end goal, it’s easy to overlook or procrastinate doing those things that fortify us against the possibility of unforeseen calamity. After all, it wasn’t raining when Noah built the ark!
Homeowner’s insurance is one such matter; most people don’t really think about their homeowner’s policy until they need to make a claim or they find themselves in need of additional coverage and are unable to secure it. When building a new home, it’s important to understand both the types of coverage available to and required by you, as the home buyer.
Make the most of your homeowner’s insurance policy by reviewing the following tips:
If you plan to purchase your own land prior to building, request an insurance quote for the land before closing on the purchase of the lot. The cost to insure the land may vary depending upon its geographical characteristics–such as whether or not it is in a flood plain or on a fault line. Most often, such attributes will not be visible to the naked eye; find out before you sign on the dotted line whether or not it will be feasible to insure your home once it is built on the lot.
Your builder carries insurance that covers things like vandalism and acts of God (i.e., high winds damaging the house while it is being built). The builder’s policy however, referred to as a Builder’s Risk policy, does not cover any of your possessions that may be on the lot–such as a shed or tools–or protect you from liability should anyone wander onto the job site when it is unattended.
Make sure your homeowner’s policy covers replacement value and not the “actual cash value.” For example, if your home sustained water damage that required the carpet to be replaced, and your carpet was eight years old, an “actual cash value” policy would only pay out the value of eight-year-old carpet, which would be considerably less than brand new carpet. You would have to make up the difference to replace the carpet in your home.
Contrary to what it may seem, adding upgrades when building a new home can actually save you money on a homeowner’s policy. Spending extra for impact-resistant roof shingles or a water detector shut-off can lower your premium. Check with your insurance agent to see if there are other incentives for premium reductions.
Don’t assume that every possible type of damage is covered under your policy. Check for exclusions such as damage from pets, hot tubs, floods, earthquakes, soil movement, and debris removal. Ask about adding policy riders if you are concerned about non-covered scenarios.
Catalog your belongings. Take still photos of items in your home, or better yet, do a video walk-through of your home to record its contents.
Periodically reassess your homeowner’s policy to see if the coverage is still adequate. Have you made any renovations or additions to your home? Do you need to consider any supplement coverage?
You’ll rest easier once you have adequate homeowner’s insurance in place, just as you will when you trust Sheffield Homes to build your new home. Call us today to start planning your dream home in the Denver metro area or in Northern Colorado, 303-420-0056.