Congratulations! If you've just purchased your first home, you'll be switching from being a tenant to being a homeowner -- with all the benefits and responsibilities that this entails. One of the big changes you're going to find is switching between renter's insurance and homeowner's insurance... and these changes can be big. Here's everything you need to know.
Homeowner's Insurance Will Be More Expensive
Homeowner's insurance is much more expensive than renter's insurance. This is to be expected, but it can come at quite a shock for a renter -- renter's insurance is very affordable. You should always get quotes for homeowner's insurance before you buy a property, as your insurance rates are going to be significantly different based on the house that you buy and where you buy it. Some homes can be in high risk areas, such as flood zones, without you realizing it.
Homeowner's Insurance Isn't Paid Monthly
In addition to being more expensive in general, your homeowner's insurance policy is usually going to be paid annually or quarterly. You will need to plan ahead of time for this significant expense. If you're purchasing a home, you may be able to roll the cost of the initial year into your mortgage loan. Moving on, you're going to have to pay for it out of pocket.
Homeowner's Insurance Covers Different Things
Your homeowner's insurance covers the property itself, something your renter's insurance would not. So it's natural to assume that it covers more things -- but, in fact, it covers different things. There are some areas in which it'll actually cover less. As an example, your renter's insurance would cover your items in the event of a flood. Homeowner's insurance usually doesn't cover flood damage unless you have an additional flood option in the package. Don't assume that because your renter's insurance covered something, your homeowner's insurance does too.
Homeowner's Insurance Isn't Optional
If you wanted to be particularly daring, you probably could have gone without renter's insurance. There's no one keeping you in renter's insurance -- it's not a necessity. But homeowner's insurance is not optional in any way if you have a mortgage; your mortgage company is going to require that you have it. Thus, you can't simply bank on not having insurance.
Working with an insurance broker is a good idea if this is your first time navigating homeowner's insurance from a place like ESI Insurance Agency. Homeowner's insurance policies are very important, and a mistake or misstep in the process could leave you very vulnerable.