There’s so much to know as a first-time homebuyer, not the least of which is how to protect your brand new asset. Home insurance is something that isn’t mandated, but homeowners should include it as part of their financial plan.

We’ve broken down the ins and outs of purchasing home insurance to ensure you receive the best possible protection at the right price.

Why should I get home insurance?

Insurance is one of those areas where you may feel like you’re throwing your hard-earned cash into a black hole every year. The truth is, the consequences of not purchasing it are too stressful to even imagine. In the case of home insurance, it will cover the replacement cost of your valuables and living expenses if you’re not able to stay in your home after an unforeseen event.

What type of home insurance should I get?

Your options range from basic which only covers specified risks, to comprehensive which covers virtually every risk. The type of insurance you purchase depends entirely on the level of risk you’re willing to take on, and how much you’re willing to pay. In any case, it’s important to speak to your provider about what’s covered to avoid surprises down the road. Some of the questions you should ask your insurance provider include:

How do I pick an insurer?

Like any financial product, there are so many choices available. It’s tricky to gauge the best home insurer, since you don’t know how responsive and reliable they’ll be until you actually need them.

To find the best insurer, talk to friends and contacts that have filed claims and ask questions about their overall customer service experience. Additionally, check out user satisfaction ratings from websites like J.D. Power.

When it comes to purchasing home insurance, shop around for the best deal and don’t stop there. When it's time to renew your insurance on an annual basis, check around to see if you’re still getting the best deal and be ready to make the switch if you’re not.

Another thing to keep in mind is that using one provider for multiple products could result in savings. For instance, having both your home and auto insurance under one company will give you additional bargaining power.

How do I get the most out of my home insurance claim?

It’s important to regularly update an inventory of the contents of your home.

Any renovations that increase the value of your home should be noted to your insurer. These steps help to ensure you recover the full value of your belongings and maximize your claim.

Furthermore, if you don’t agree with the amount of your claim, don’t be afraid to dispute it. According to surveys by Consumer Reports, those who challenge a payout receive an average of $6,000 more than those who do not.

Buying your first home is an exciting time, and protecting your home is as important as the purchase itself. Do your research and choose wisely. Your future self will thank you.

Pira Kumarasamy
Pira is a freelance writer and communications consultant specializing in financial services. She has a strong interest in personal finance topics including areas like the financial markets, student loans and real estate. Pira holds a bachelor’s degree in economics from Wilfrid Laurier University and a postgraduate certificate in corporate communications from Seneca College.

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