A Beginner’s Guide to Understanding Homeowners Insurance

While buying your first home is exciting, buying your first homeowners insurance policy isn’t nearly as much fun. New homeowners have all kinds of questions about what homeowners insurance covers and what it doesn’t, and understandably so. When shopping around for a policy to protect the biggest financial investment of your life, you want to feel confident that you’ll walk away with enough coverage.

Fortunately, with just a bit of a debriefing on homeowners insurance, those shopping for their first policy can feel empowered and knowledgeable even before meeting with an insurance agent. Here’s a quick breakdown of the finer nuances of homeowners insurance coverage, including how much you need to protect your home and belongings.

What Homeowners Insurance Covers

When buying an insurance policy, it’s important to know what it’s going to do for you as far as offering protection for your home and belongings. Since a home is made up of much more than just four walls and a roof, homeowners insurance includes coverage for all related aspects — not just the building itself. Coverage also aims to protect a home’s contents, including the family and their guests, against potential disasters within or surrounding the house.

Standard homeowners insurance policies have four main coverage categories:

• Damage to the home’s structure: The first category of property damage concerns the actual dwelling or the structure of the house itself. Your homeowners policy protects the home’s structure from damage or destruction due to covered perils, which we’ll explore further in the next section. Detached structures, such as sheds, are often covered as well.
• Damage to your personal property: This second aspect of property damage covers your personal belongings (e.g., furniture, electronics, clothing, artwork, decorations, etc.) stored within the home or in places such as storage units, to an extent. Damage, destruction, or loss of your personal property due to a covered peril is all protected under your insurance policy.
• Liability: Homeowners policies include liability coverage for both bodily injury and property damage to a third party. Coverage extends to all members of your family living in the home, including pets. Liability coverage protects you against legal claims by reimbursing you for attorney and court fees, including any settlements you’re ordered to pay if the case rules against you. Your homeowners policy even protects against incidents in which you are sued away from home.
• Additional living expenses: If your home gets badly damaged or destroyed and you’re forced to live elsewhere while repairs are done, your insurance will reimburse you for the additional expenses such as hotel rooms, eating out, extra gas mileage, etc., within reason.

From structural damage to the accidental injury of a guest, you’re likely to be covered by a homeowners insurance policy. For a claim to be successful, the cause of the issue needs to be due to a covered peril.

Covered Perils Under Homeowners Insurance

While it would be nice if homeowners insurance covered your home and belongings from absolutely all potential hazards, in reality, there isn’t any insurance policy that comes without a set of defined covered perils and a list of specific exclusions. First, we’ll start with the positives.

Commonly covered perils under standard homeowners policies include the following:

• Theft
• Vandalism
• Explosion
• Fire and smoke
• Water damage
• Aircraft or vehicle damage
• Riots
• Falling objects (and trees)
• Roof collapse (due to weight of ice/snow)
• Certain natural disasters (i.e., windstorms, hail, lightning, and blizzards)

Notice that only some, not all, natural disasters are covered by homeowners insurance. That being said, it’s time for the flipside of the coin.

What Homeowners Insurance Doesn’t Cover

Perhaps even more important than knowing what your homeowners policy covers is understanding what it doesn’t. This can save you the hassle of filing a claim that’s bound to get denied or counting on a reimbursement that’s not going to happen.

Standard homeowners policies typically do NOT cover the following perils:

• Certain natural disasters (i.e., floods, earthquakes, and mudslides)
• Maintenance-related losses
• Wear and tear damage (i.e., failure of the homeowner to maintain upkeep of the home)
• Insect damage or infestations
• Damage from war or nuclear fallout
• Business-related liability

If you run a business out of your home, homeowners insurance typically won’t cover liability for related mishaps. Homeowners policies also tend to limit liability coverage for certain types of vehicles, including aircraft, ATVs and boats and have very specific exceptions for certain powered vehicles, such as ride-on lawnmowers. You’ll need to check the policy to be sure of coverage for special vehicles.

Knowing How Much Coverage You Need to Purchase for Your Home

Once you understand what homeowners insurance does and doesn’t cover, you’ll need to figure out how much coverage you need. When insuring the home itself, consider how much it would cost to rebuild if a disaster caused destruction. Several things influence rebuilding costs for a home, including location, the type and age of construction, surface area, amenities, built-in plumbing and heating systems, and various features. Additionally, any measures taken to make a home nicer may increase its value and make it more expensive to rebuild.

Depending on the specific home’s value, rebuilding costs may run somewhere between $80-$150 per square foot. Plenty of online tools are available to help calculate the estimated cost to rebuild your home. Insurance agents are also equipped with professional tools for accurate estimates to help get you set up with the right amount of coverage for your home. It’s better to err on the side of purchasing too much coverage for your home’s structure, should you ever need to rebuild following a disaster.

Knowing How Much Coverage You Need to Purchase for Your Belongings

When it comes to insuring your personal belongings, homeowners policies typically limit replacement coverage for your personal property to 60% of your home’s total insured value. For example, if you purchase $200,000 worth of insurance on your home, $120,000 of coverage would apply to your belongings. Of course, you can always add more coverage. Should disaster strike, it’s a good idea to have a record of your belongings in photo or video format to help receive the reimbursement you’re entitled to.

If you have expensive or valuable items like furnishings, artwork, jewelry, or electronics, you might want to purchase extra coverage for your property. Special endorsements or riders are available for specific types of property that may be on the pricier side, such as jewelry and electronics. Purchasing endorsements or riders can help ensure your items are covered for their replacement costs and won’t exceed your policy’s coverage limit if they are lost, damaged, or destroyed.

Now that you have a deeper understanding of homeowners insurance coverage and how much is needed, you can begin your hunt for the right policy with a sense of empowerment and confidence. Don’t hesitate to ask your independent insurance agent for further clarification on any gray areas. Good luck.

Paul Martin, CPCU, is an insurance professional for Trusted Choice with over 30 years’ experience in the field. Throughout his career, his mission has been to advance the insurance industry through education to be better equipped to serve the public.

Insider Tips to Buying a Home in Today’s Market

It’s always hard to predict the future, especially with the housing market. But one thing is for sure – real estate remains a sound investment. If you’re looking for your dream home, here are some tips to help set you up for success and guide you through this buying season.

Assess Your Financial Health
Before you fall in love with your dream home, make sure you’re prepared to purchase it. Take a look at your bank accounts along with your monthly spending, so you have a clear and realistic picture of your finances. This will also help you figure out how much you can afford to put toward a down payment. It’s also a good time to check your credit score. Most importantly, you’ll want to meet with a loan officer to get pre-approved, so sellers take you seriously and you’re in a better position to make a strong offer.

Tip: A pre-approval gives you more negotiating power because it tells the seller and real estate agent that your funding is in place and ready to go.

 Stay Flexible
Whether it’s time or money, be prepared to give a little more. Say for instance, there’s competition on a house and you’ve been outbid, but you have the flexibility to give the seller the extra time they need to close and move out. That can make a huge difference and could even put you ahead of the competition. Showing the seller that you’re willing to go the extra mile to purchase their home could earn your offer a second glance, especially if it helps make their life easier.

 Tip: Try to refrain from asking for favors. This is not the time to ask the seller to give you the refrigerator or washer and dryer, part with playset or paint the front door.

 You Found the One
You found a home that meets all or most of your wish list, it’s within your price range and you’ve stalked the neighborhood to make sure it’s right for you. Now’s the time to make an offer. Keep in mind that your opening offer should be based on two things: what you can afford and what you really believe the property is worth. Sure, there’s always a possibility that there will be other offers, regardless of the time of year and the market, but try not to let that influence you to pay more than you should.

Tip: Offer more earnest money. While it’s not always required, it could help you stand out in this competitive housing market. Sellers like buyers that make these good faith deposits because they want assurance that the sale won’t fall through.

Buying a new home is an exciting time and can also be a stressful time, but if you’re prepared and keep these tips in mind, you should find it a much smoother process. And finally getting the keys to your new home makes it all worth it!

Two-Month Moving Checklist

The following is a guest post by Laura McHolm, Chief of Organized Living & NorthStar Moving Company Co-Founder  

 The pandemic stay-at-home protocols forced us to reevaluate our homes and where we live. Questions about our home size, needing a home office long term and thoughts of relocation to more affordable cities or closer to family were on the minds of many during the last year. Whether due to a life change or a change brought about by the pandemic, millions of people are moving and creating the “Great Reshuffling.” 

 This record rise in Americans moving, coupled with the typical busy moving season in the summer and a shortage of workers, has created the perfect storm. Moving companies are incredibly busy and are working hard to hire the qualified help they need. Moving is challenging enough without scrambling to find a reputable moving company.   

 So what does this mean for those planning to move this summer? Plan ahead! Make your moving reservations as early as possible to beat the surge and put your organizational skills in overdrive. 

 If possible, give yourself eight weeks to handle the moving to-dos in an orderly, low-stress manner. Use the steps below in this two-month moving calendar to keep you calm and prepared. Simply follow these steps and check them off one-by-one:  

 EIGHT WEEKS TO GO: 

• Start the process of selecting a mover 

• Check a mover’s record with the Better Business Bureau in your state and social review sites. A great reputation is the best way to choose a mover 

• Book your mover 
• Start to inventory and divide up your belongings: Decide who gets what, which items to donate, recycle, to take and which items (if any) need to go into short-term or long-term storage 

FOUR WEEKS TO GO:  

• Mail change of address cards or change your information online at the following:  

• • Post office 
  • Local Department of Motor Vehicles for License & Registration  
  • Social security  
  • Insurance companies 
  • Credit card companies 

• • Credit bureau and/or other creditors 
  • Employer (to forward W2s) 
  • Broker 
  • Mail order accounts 
  • Magazines 

• • Friends and relatives 

• Gather personal records (medical, dental, etc.) 
• Arrange to transfer children’s school records 
• Gather all pet’s vet records and make sure all pets are microchipped and chip corresponds to a cell number that goes with you on your move. Order new tags and licenses with new address and your cell phone number 

• Check homeowner’s insurance policies to see if moving is covered. Be sure your new home is protected by transferring fire, theft and other personal-property insurance 
• START TO PACK 

THREE WEEKS TO GO: 

• Make arrangements to discontinue current utilities and schedule the start-up of new utilities: 

• • Landline telephone service 
  • Cable TV  
  • Internet  
  • Electricity (check for refund) 
  • Gas (check for refund) 

• • Fuel oil 
  • House cleaners 
  • Babysitters 
  • Dog walkers 
  • Gardeners 

• • Pool Service 
  • Diaper service 
  • Water 
  • Water softener 
  • Parking 

• • Other: ________________________ 

• • Have appliances serviced for shipment 

 TWO WEEKS TO GO: 

• Arrange to transfer local bank accounts 
• Ask doctors, dentists and veterinarians for medical records  
• Cancel newspaper delivery 
• Refill all prescriptions. Get prescriptions transferred to a new pharmacy closer to the new home 
• Make arrangements to move children and pets. Do you need a babysitter for a day or two? A pet sitter?  

• Confirm that the mover will move houseplants; if not, make arrangements. Houseplants, usually, cannot be moved by a mover, especially on long distance or out of state moves 
• Start to disassemble any shelving, closet systems, etc. that you plan to take or arrange with the mover that they will be doing this on the day of the move 
• If you need one, hire a cleaning crew to come clean your empty place to get your deposit back. Will your new place need a cleaning crew before you move in too?  

 ONE WEEK TO GO: 

• Pack in separate boxes the items necessary for first days in the new home: Label “LOAD LAST.” And label where to put each of those boxes in your new home: 

• • Medicine (always keep prescriptions on you) 
  • Comfortable clothes 
  • Linens and towels 
  • Toothbrushes and toiletries 

• • Paper goods 
  • Disposable plates and silverware 
  • Foil and wax paper 
  • Plastic containers 
  • Microwave 

• • Vacuum cleaner 
  • Garbage bags 
  • Tool kit 
  • Step ladder 
  • Extension cords 

• • Light bulbs 
  • Cleaning items (mop and pail, broom and dust pan, etc.) 

• • Each member of the family should also pack a suitcase with what they need for a few days while you’re getting settled into your new place. Don’t forget cell phone chargers, medications and favorite teddy bears 
• If the movers are packing all or part of your belongings, call to schedule and confirm the details. Make sure your mover knows how much packing you expect to do yourself and how much you expect them to do 
• Plan to use up most food items before the move. If you have any leftover food on moving day, donate it to Move For Hunger 

• Register to vote 

 TWO DAYS TO GO: 

• Defrost and dry refrigerators/freezers to be moved 
• Gather valuables and important documents from jewelry cases, safe deposit box, etc. to take with you in the car. Do not pack these items with your other belongings 

 MOVING DAY! YOU MADE IT! 

 Congratulations, you conquered “The Great Reshuffling!” Not only did you move during a very unique time, you stayed organized and, hopefully, the entire process was much more stress-free. As the winner of this moving marathon, you now get to slowly unpack and peacefully settle into your new and improved lifestyle. 

How Much Home Can You Afford?

You’ve been dreaming day and night about it: Buying your first home. It’s a thrilling prospect for everyone, especially first-time homeowners. With countless properties available online at your fingertips, it’s easy to begin house hunting as soon as the idea strikes. But it’s critical to determine your budget as a homebuyer before you start shopping seriously.

Determining your creditworthiness can help you learn what size mortgage you’ll qualify for and lead you to a realistic homebuying budget. When you obtain a pre-approval from a mortgage lender, you’ll know exactly what you can afford. Having a pre-approval letter will also make your offer more appealing to sellers. To ensure you are set for success for the homebuying journey, contact your Coldwell Banker-affiliated agent, who can connect you with a trusted loan officer.

Prior to any significant purchase, it’s important to set a realistic budget, and buying a home is no exception. Do a reality check on your personal finances. Scrutinize your monthly income, expenses and debt-to-income ratio, so you can assess what funds you’ll have available for a down payment and a monthly payment once you move into your new home.

Another important piece of this puzzle is your credit history. Check your current credit report for any debts you need to pay off so you’re in a stronger position when it comes time to apply for a loan. The higher your credit score is, the more access you’ll have to loans and lower interest rates.

Refer to a handy, online mortgage calculator to study property purchase prices. Do a quick search online and you’ll find a variety of free options. In fact, many allow you to figure in important, relevant factors such as property taxes, down payment amounts, interest rates and home insurance to provide a detailed breakdown of what your monthly payments would look like.

To be really savvy, factor in related expenses such as upfront costs, closing costs and other fees you’ll have prior to closing on a home. Also, budget for standard property maintenance expenses such as homeowner’s insurance, taxes and repairs that may be needed in the short term after closing.

Comfort and joy in your first home start with setting realistic financial expectations ahead of time. Buying a home will likely be the biggest purchase of your life, after all.

7 Tips Every First Time Home Buyer Should Read

When buying your first home, it’s easy to get overwhelmed. A few words of advice can go a long way, so we’ve enlisted tips and tricks from our network of Coldwell Banker professionals. See their insight on the process, what to look for in a home, and home improvements. And most importantly, best of luck in your journey to becoming a homeowner!

“Be patient…don’t over pay for something because you feel pressure. Good things come to those who wait!” – Shari Pesa, Executive Business Consultant, Coldwell Banker Real Estate

“Remember you are buying the house the way it is. Yes you may plan on renovating, but plans change. Can you live in the house the way it is for a few years? If so, then go for it! Don’t compromise on what you want thinking you will redo everything tomorrow.” – Tracy Freeman, Coldwell Banker Residential Brokerage 

806 Prospect St, Westfield Town, NJ listed by Robert Lacovara with Coldwell Banker Residential Brokerage

“Make sure to align your expectations with the reality of where you want to live and what your price range truly affords. We all want the home near the beach for $200k but when it’s more like $2M, it is important to adjust expectations.” – Cara Ameer, Coldwell Banker Vanguard Realty Inc. 

“Make sure you work with a realtor that is experienced and knows the area, especially in flood plains where additional insurance costs may impact your finances. Every house is different. Do not make assumptions.” – Jennifer Cavanaugh Ronzo, Coldwell Banker Harbor Light

811 Carpenter Town Lane, Cary, NC listed by James Ruehle with Coldwell Banker Howard Perry and Walston

“Don’t buy a home for the total amount the bank approves you for because you will need to buy things for the house when you move in. Things you never thought about until you’re living there (i.e.: hoses, grass seed, window treatments, snow blower, lawn mower…) If you buy at the highest loan approval level you could end up “house poor” and not have extra money for emergency expenses that arise or fun things for your new home.” – Holly Fetherlin, Regional Marketing Manager, Coldwell Banker Real Estate

“Ask questions. Lots and lots of questions.” – David Siroty, VP of Communications, Coldwell Banker Real Estate

1059 SE Portlandia Ave, Hillsboro, OR listed by Joseph Charny with Coldwell Banker Seal

“Don’t be scared of a little work. It might be worth investing in something that doesn’t necessarily look like your dream home now, but with a fresh coat of paint and a few minor upgrades, you could have your dream home without paying the price of your nightmares.” – Jimmy Hammel, Manager, Digital Marketing, Coldwell Banker Real Estate