A Simple Guide to Home Insurance for First-time Buyers in California

After socking money away for a down payment, you’re finally ready to buy a house. While this is such an exciting venture, it also means making several critical decisions. You want to work with a reputable realtor, find a home in California that matches your needs, and then look at different homeowner’s insurance plans.

As a first-time homeowner, things might seem a little overwhelming. However, for something like insurance, this is when an experienced insurer can help tremendously. The information below will give you a heads-up on what to expect when you and an agent discuss the many homeowner’s insurance plans available.

Helpful Tips for Choosing One of the Many Homeowner’s Insurance Plans

  • Work With an Independent Insurance Agent

Why does this matter? Well, an independent agent works for multiple insurance companies as opposed to just one. Because of that, they can make comparisons on your behalf and then present you with the best coverage at the most cost-efficient price. 

So, in California, your agent can look at what companies like Lemonade, Insurify, Hippo, American Family, and others have for first-time buyers. Ultimately, this gives you more flexibility when choosing among the various plans.

  • Replacement Cost Vs. Market Value

When choosing your homeowner’s insurance, this is probably one of the most important aspects to consider. As an example, replacement cost means if your house burned to the ground, the insurance company would cut you a check for the money it would take to rebuild a similar type and quality of the structure. If you go this route, make sure you have adequate coverage.

With market value, the insurance policy only covers the current value of the property. So, if the market were in a downward turn at the time your house burned down, you’d only get a check for the value of it at that time. For instance, say you buy a $500,000 home in California. However, the market drops, lowering the value to $425,000. With market value coverage, you’d receive $425,000 to rebuild a house you paid $500,000 for.

  • Take Advantage of Bundles

There’s a good chance you already have your vehicles covered by a particular insurance company. However, as a first-time homebuyer, bundling your policies is convenient and a great way to save money. In this case, you’d have the same insurance company for your house, vehicles, boat, business, etc.

  • Think Twice Before Filing a Claim

That might sound odd, considering the purpose of having insurance is to get reimbursed if something goes awry. However, you want to think before you file a claim. Here’s why,  depending on the deductible that you choose, it might be more expensive to file a claim than to make the repairs yourself.

Also, if you file a lot of claims, two things can happen. First, your monthly premiums will likely increase. Second, an overabundance of claims could lead to the insurance company to drop you as a policyholder. Yes, you have every right to seek reimbursement but at the same time, make sure filing a claim makes sense.

  • Review Your Policy Annually

Once a year, you and your insurance agent should sit down to go over your policy. During that time, the agent might find that one of the other homeowner’s insurance plans is a better fit for your needs. Something else to note is that after buying your house, you might’ve made upgrades or done some renovation. If so, your current policy might not suffice.

Speak With an Expert

Armed with a little bit of knowledge about homeowner’s insurance, now you’re ready to meet with a trusted agent. Knowing you have optimal protection at a price you can afford will make homeownership more enjoyable.

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