You’ve achieved the American dream and become a homeowner, but how do you protect the biggest investment you’ve ever made. Michael Silverman, president and CEO of Silver Lining Insurance Agency, here offers some advice for properly insuring your first home.
Michael Silverman
President and CEO, Silver Lining Insurance Agency
“The specific ‘needs’ in a home policy are not only based on the people purchasing the home, but also the actual house itself.”
What should first-time homebuyers be looking for in a home insurance policy?
The first-time home buy has a lot going on. However, the No. 1 part of the home policy (at the outset) is to secure replacement cost coverage – not actual cash value. The definition of replacement cost is: What will it cost to rebuild the house, in its entirety, should there be a major claim (e.g., fire)?
Many people ask if the basement should be included, based on square footage – yes, it should. If there is a major fire, the foundation of the house is frequently compromised; therefore, the entire structure needs to be rebuilt. Once the value of the replacement cost is discussed, the other parts “fall into place.”
The best thing for a new home buyer to do is to get referred to a professional insurance agent who represents a number of different insurance carriers, rather than one who is representing only one particular company. This allows the homebuyer to look at all their options with a professional.
How can an insurer tailor (or a homeowner seek out) a home insurance policy that caters to an individual’s specific needs?
The specific “needs” in a home policy are not only based on the people purchasing the home, but also the actual house itself. This is where having conversations with a professional insurance representative comes into play.
The discussions will center around what is important to the buyer, as well as what is required/important with regard to the home. Is there is a pool? Is there a movie room, game room, or other unique feature in the house? If so, these need to be discussed and properly protected.
What are some aspects of home insurance first-time buyers tend to overlook?
The most frequently overlooked topic is flood insurance. Not every home requires or needs flood insurance, but it is very important to have that discussion. Flood is excluded on all home policies, however, it can be added (directly on some policies) or a separate policy can be issued. Flood insurance is not as expensive as many people believe it to be, but should be examined.
Other overlooked items for protection are valuable articles (e.g., jewelry, silver, silverware, cameras, bicycles, expensive sporting equipment like skis or golf clubs). These items need to be specifically insured either with purchase receipts or appraisals, or in blanket coverages, but coverage amounts are very limited for these items in base policies.
Is there any other advice you’d like to pass along to first-time homebuyers?
Get a referral to a professional insurance agent that is willing to spend time answering your questions and asking questions of you. You, a first-time home buyer, do not know what you do not know. It is the insurance professional who can help you through this stressful — but not difficult — purchase.