Home Insurance Articles
Does Your Home Insurance Coverage Carry Over When You Buy A New Home
2010-03-02
You've just found the home you want to buy. This is undeniably a thrilling moment. But don't forget about one thing: your home insurance. This may be your second home, or maybe even your third or fourth. But you'll still have to purchase a new policy before receiving a mortgage loan from a lender or bank. This is because home insurance coverage does not carry over from one residence to the next, so even though you may already have a homeowners insurance policy, you'll still have to purchase a new one before closing on your next real estate deal. This may seem like an inconvenience, especially when you've already filled out a mountain of paperwork to buy your new home, but the truth is, requiring homeowners to take out new home insurance coverage every time they buy a new residence makes sound financial sense: Your new residence will require different levels of insurance.
Think about it: Your new home is unique. Therefore, the amount and type of homeowners insurance it requires is unique, too. For instance, your new home might be located in a zip code that boasts a lower crime rate. If this is so, your monthly home insurance premium might drop. Maybe your new home is located in an area prone to floods. If so, you might need to take out additional flood insurance to protect your valuables from water damage. Maybe your new residence comes with an advanced electronic security system: If it does, this, too, will lower the amount you have to pay each month for home insurance coverage.
This is just the beginning of the changes that you'll have to make when it comes to home insurance with the purchase of a new home. Your new home may be larger, and it may be appraised at a far higher rate than was your old residence. If this is the case, you'll need to up your coverage. After all, you'll need a greater amount of money should your new home be damaged or, even worse, destroyed.
It's important to remember when it's time to take out home insurance, new home coverage doesn't have to come from your current insurance company. If you're not happy with the service you've received from them, feel free to research additional insurance providers. Who knows? You might find a better monthly rate for the same amount of coverage. When searching for a new insurance policy, make sure to get everything in writing, especially when it comes to your monthly payment and the exact coverage that it buys. Home insurance coverage is one area in which you don't want to face any future surprises.