As a first-time home buyer, there are probably several crucial things you don't know about home insurance. Below are some of the insurance issues you should know even before buying a house.

Buy Before Closing

If you are buying the home on a mortgage, as many people do, then you need your home insurance coverage in place before you can close the purchase process. This is a typical requirement for most mortgage lenders.

The requirement makes sense if you consider that the lender has a financial interest in your house. As such, they must confirm that the house is adequately covered before they can advance you the loan. A delay in getting insurance coverage is likely to delay the closing too.

The History of the House Matters

You may not have a home insurance history, but the house you are about to purchase most likely does. The insurance history of the house will determine whether you can get coverage and the premiums for that coverage. Therefore, get a comprehensive loss underwriting exchange (CLUE) report to learn about the insurance history of the house before purchase. You might be in for high premiums if the house has generated multiple insurance claims in the recent past.

Don't Fixate On the Market Value

You need to get an accurate value of the house to buy the right coverage for it. However, this value is different from the market value or the amount of money you have spent to buy the house. The insurance value is the amount you would need to rebuild the house if a disaster, like a fire outbreak, wiped it out. Thus, the insurance value of the house doesn't consider other factors, such as the cost of the land, that don't come into account during the rebuilding.

Mind the Coverage Gaps

There are various forms of home insurance policies, and the most basic ones such as HO-1 or HO-2 don't offer comprehensive coverage. In fact, many people opt for HO-3, which still doesn't cover every imaginable risk. You need to scrutinize your risk exposure and analyze the coverage on offer so that you can buy the best coverage for your situation. Note that even the best policy might not cover everything, so you may need riders or add-ons for comprehensive coverage.

As you can see, homeowners insurance is not always a straightforward affair. Consult an insurance agent to help you figure out your coverage needs plus any other information you should have.