Buying Your First Home? Tips and Insurance Considerations

Popping champagne in your new home, imagining cozy nights by the fireplace - these are just some images associated with the euphoric experience of buying your first home. For most first-time homebuyers, there is a wish list from which we try to tick off as many desirables as possible.

But amid the excitement, it's crucial to remember that Murphy's Law operates in the real estate world, too.

This is why adding risk and insurance items to your wish list is important. Sure, it might hamper the mood a bit, and even disqualify homes you would otherwise have considered purchasing. However, your family and pocketbook will thank you in the long run.

So, before you dive headfirst into paint swatches and accent pillows, let's talk about six risk and insurance considerations for first-time homebuyers:

1. Liability Protection: A 2023 study by the Insurance Information Institute found the average liability claim exceeds $16,000 – a hefty price tag to absorb on your own. Liability insurance protects you from financial fallout if someone gets injured on your property. Therefore, it’s important to carefully consider homes with pools, trampolines, or other attractive nuisances where the risk of injury increases.
2. Flooding: Rising sea levels and unpredictable weather patterns make flood insurance a worthwhile investment. According to the NFIP, 25% of flood claims occur outside high-risk flood areas. Remember, your homeowner's policy won't cover flood damage, so be proactive and get covered with a separate flood insurance policy.
3. Earthquakes, Hurricanes, and Sinkholes: Geography matters when selecting your first home. All 50 states have the potential to experience seismic activity, though some are more prone than others. Then there are the coastal states that are exposed to hurricanes along with half a dozen states with high sinkhole activity. Do your research and learn about these natural homeownership risks.
4. Location, Location, Location: Understand the theft risk in the neighborhoods you are considering. Avoiding homes with quick access to nearby roads or highways might be wise, even those thought to be in safe areas. If a home is on a busy street, think about the safety of children and guests who might potentially get injured by a distracted driver.
5. Electrical and Plumbing: Considering a home built before 1995? If so, it may have polybutylene piping which is known to cause leaks and other problems. Also, check electrical systems for aluminum or knob-and-tube wiring and ungrounded outlets. Each is known to increase the risk of fire.
6. Umbrella Insurance: Think of umbrella insurance as your superhero cape. It provides additional liability protection above and beyond your existing policies, covering high-cost lawsuits or claims. It's not a must-have for everyone, but it's worth considering if you have significant assets or high-risk activities.

Insurance isn't the most glamorous part of homeownership, but the peace of mind lets you truly enjoy your new home. By considering these six tips, you can avoid unexpected financial woes and focus on creating happy memories in your dream home.

If you could use a hand in identifying homeownership risks and how to properly protect yourself with insurance, contact our office today.