Buying a home is often a chaotic period of time, but you want to make sure you have the appropriate homeowners insurance coverage. Whether it’s a mistake on your policy or you’re trying to save money, you don’t want to end up with partial coverage.
Homeowners Insurance Mishaps
Mistakes can happen, so please double check the numbers on your insurance policy after you close on your home. Especially check the insurance value of your home and your personal property.
A lot of times, people reduce the insurance coverage on their house to get it in line with their other credit card payments and monthly expenses in order to qualify for a home loan. But it is possible to reduce your insurance coverage to the point that it only covers the mortgage and not the true replacement cost of the house.
Remember, replacement cost is a future value to rebuild the existing house. You need to know how much will it cost to rebuild your house, and who’s going to pay for it.
For First-Time Home Buyers
If you’re a first-time home buyer, the closing process can seem a little confusing. You know you’ll need to have homeowners insurance to cover the house or mortgage. Don’t forget about the value of your personal property inside the house.
We recommend you get a competitive insurance quote a few months after closing. Make sure your competitive quote compares the same home values and personal property values. Make sure you have an insurance company that provides good value coverage.
Get a Competitive Insurance Quote & Know Your Coverage
Getting competitive insurance quotes and knowing your coverage are important. We recommend getting competitive insurance quotes every 5 years or so. And when you compare, make sure you’re comparing the true value of your house and your coverages are the same, otherwise, it’s not a true comparison.
We have heard of people thinking they’re saving a tremendous amount of money on their insurance policy only to realize that their 12 month policy was compared to a 6 month policy. That’s not a true comparison.
If you do decide to change insurance companies, don’t worry! It happens every day. It’s understood by insurance companies that people will shop around, get competitive quotes, and look to save money on their coverages. Here are a couple things to remember…
You Could Get a Refund
Recently, we had a new client ask, “Will I get my insurance premium back if I change insurance companies?”
Yes! One of the laws in the state of Virginia requires insurance companies to refund unearned premium when a client leaves.
If you decide to switch insurance providers, the date your new homeowner's insurance coverage takes effect is the end date of your previous policy. Any monies that you have already paid for future coverage (after the end date) will be refunded back to you.
What If Your Escrow Account Pays For Your Insurance?
If you’re paying your homeowners insurance through your mortgage escrow account, you need to deposit your refunded money back into your escrow account.
Usually, the insurance refund checks are made out to you, the client, and not the original source of the payment (i.e. the mortgage company). So you need to put the refunded money back to where it first came from. This will help to keep your mortgage escrow account in balance because the mortgage company recalculates all the costs that need to be paid on an annual basis.
We at Bruce Gardner Insurance Agency are happy to work with home buyers or to give a competitive quote a few months after you’ve closed on your home. We explain our policies, explain how the coverage is determined, and answer your questions about your homeowner's insurance.
Contact us to get started with a free homeowners insurance quote.