5 Important Things to do BEFORE Buying Homeowner’s Insurance

by Gary Castle

Purchasing insurance for your Home, Co-op, Condominium or Apartment can be a confusing process.

The purpose is to protect your property and your assets in the event of a loss such as a fire, theft, water damage, lawsuit, etc.

Trying to understand your coverage AFTER a loss occurs is a mistake

This method can leave you with an uninsured loss or even worse in financial ruin. There are ways to prevent these unfortunate surprises from happening.

1. Know the claims process BEFORE you have a loss.

Managing a claim is a stressful experience. Why are some claims paid in full, some in part or some not at all? What information do I need to file a claim? Receipts, pictures, estimates, etc.

A conversation with your broker’s in-house claim department can afford you valuable information to prepare you for when a loss occurs. 

Remember, an independent agent/broker can be your advocate when dealing with the insurance company.

2 – Understand WHAT you are buying.

Do I need to insure my house based on the Replacement Cost or the Market Value? Does my condominium or co-op provide insurance coverage for my kitchen cabinets, bathroom fixtures, wood flooring, etc?

Are my personal belongings covered under my policy if stolen from my car or when I’m on a trip?

Homes have mortgages, condos have by-laws, co-ops have proprietary leases and apartments have residential leases. An insurance professional can assist you in understanding what contractual obligations you may have under these agreements.

Identify any unusual or unique details about your lifestyle or residence that may differentiate it from another person or with a property of similar cost, size, and location.

3. Know WHO you are buying from.

There’re 24,000 restaurants in New York City. Would you eat at all of them?

Similarly, there are thousands of agents, brokers and direct writing insurance companies from whom you can purchase insurance. Are they equally qualified?

A referral from a respected source like an accountant, attorney, friend, relative or colleague can help direct you to a company that has already demonstrated its professionalism and level of service. 

Purchasing insurance online without any direct, personal guidance may result in an overlooked or missed coverage. An Independent insurance agent represents many insurance companies and therefore can find the correct policy for you and your residence.

4. Know YOUR specific needs.

For example, What limits do I need? Can I get sued if my sink leaks to the apartment below? Does my swimming pool create an added exposure that I need to protect? What happens if my Nanny gets hurt while working for me? My residence is undergoing construction, do I need to notify someone? Do I need specific coverage for my Jewelry? 

The goal is, when you know and understand your own specific needs, it’s less likely you will be surprised by an uncovered claim. 

Remember, things will change over time so periodic reviews and discussions with an insurance professional are recommended.

5. Correlation: Cost of coverage and scope of coverage.

“You get what you pay for” is a phrase that is very relevant when it comes to buying insurance. 

Finding out you have no coverage for a fire, stolen laptop, flooded basement, theft of belongings from a car or while on vacation can be a costly experience. Learning that you are not covered fully, or at all, for a contractor injured on your premises can be a life-changing event.

As you can see cutting corners when purchasing insurance or not having insurance at all can result in a financial loss that can be large or small. A good broker can work with you to help decide where your insurance premium dollars are best spent.

A small investment in time now, can pay off greatly later on when you may need your insurance to respond to a claim.

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