While buying the house, one of the other expenses over the buying cost is the insurance of the house. The insurance cost depends on the location of the property and how old it is (the foundation date till the buying date). The average annual homeowners insurance premium is around $1,200 in most cases. Though it looks like a big expense, keeping in mind that one will be reimbursed in case of anything wrong happens to the property, it seems worth it.
The buyer should understand the right type of insurance coverage required. A standard home insurance can be divided in four parts- dwelling coverage, other structure coverage, loss-of-use coverage and personal property coverage. The insurance should be enough to cover the cost of rebuilding the home (if required in case of fire or natural disasters) from the foundation up. The insurance should surely be able to replace or recover the original property. This may seem logical but it needs to be considered that it isn’t common.
According to KJ VanDerwerken, the expert on home insurance, about two-thirds of American homes are under insured, by an average of more than 20%. People fall for a cheap policy without reflecting on the fact that it is their home and in case of rebuilding they will want back a home that existed. With the main building the main, external structures need to be insured too. Fences, detached garages and sheds are of as much importance and require maintenance time to time.
The other thing to bring to attention is one will need to pay for alternative accommodations if the home is being rebuilt or repaired after an event like from a natural disaster or a fire. This will require a small amount of insurance but it needs to be considered during buying an insurance. And finally the personal property coverage will cover the lost or damaged things inside home.
