What is homeowners insurance? Why should you consider obtaining it when purchasing a home?

Homeowners insurance is something that’s required by the lender. If you get a loan to purchase a house, the lender will require that you insure their asset.

When you obtain homeowners insurance, you want to make sure of a couple of things. First, you want to make sure it covers the structure of the house—not just what you pay for it, but what it would cost for you to rebuild it. You also need to make sure it covers the contents of the house. Just because the TV you bought four years ago is now worth $100 doesn’t mean you can replace it for $100, so make sure you get replacements costs.

“There’s nothing that will fix a flooded house if you don’t have flood insurance.”

Another thing to consider is if you’re buying in an area that requires flood insurance. Flood insurance is required in flood zone AE areas, but it’s not required in zone X areas. If you look at what happened in Houston last year and West Virginia the year before, those areas didn’t require flood insurance—they were flood zone X areas.

Living in flood zone X areas doesn’t cost nearly as much as living in flood zone AE areas, but I still recommend getting flood insurance. Remember—insurance is not for the expected. If we woke up one day and knew our car was going to crash, we wouldn’t drive it that day. We have insurance to be insured against the unexpected.

There’s nothing that will fix a flooded house if you don’t have flood insurance. Those funds will have to come out of your back pocket, and most people don’t have an extra $100,000 or $200,000 lying around to repair a house that’s been destroyed by a flood.

If you have any questions about homeowners insurance or any other unexpected costs when buying a home, don’t hesitate to reach out to me. I’d be happy to help you.