One of the most tragic things about the fire that consumed my church friend’s house was the fact that they did not have rental insurance. What we found out only later was that a family member had encouraged them to get the insurance before they took a trip overseas shortly before the accident!
House insurance was mandatory with the mortgage we got with our current house. We went with a family friend and, when you think about how much it insures, the little that you pay per year is amazing for what it can do in the case of a fire or other catastrophic event.
But just because it seems cheap when compared to other kinds of insurance (read car, life, etc.), that doesn’t mean that there aren’t deals to be had.
The truth is that you need to do your homework when you’re going about looking for home insurance. And it’s a lot for a new home owner to think about—I mean, you’re getting terms like closing costs, PMI, FHA, and all sorts of other acronyms thrown at you while you’re wondering where you’re going to get the money for a down payment.
Hopefully you’re going for a 15-year mortgage and you have 20% down, but that’s another post.
In any case, make sure that you check around, do some research online, and make sure that you’re getting not only the best deal, but that all important things are covered.
Oh, and decide just how much protection you want. Some times you can’t help taking what the bank wants, but if you get some leeway you’ll want to remember that most insurance companies will quote you how much to build your house back exactly the way it is—in all of its outdated and old construction material glory. Meaning, if you have plaster walls, they’ll quote plaster, even if drywall is much cheaper.
We managed to get renter’s down here for $9 a month, which is astounding, and it covers everything (even levees breaking!!).
It did make me frustrated to hear stories of friends who lost everything in Katrina, only to not get insurance money because the companies found a loophole to where they didn’t have to pay (God-made disaster vs. man-made disaster). If the insurance cos. aren’t going to keep up their end of the agreement, then people shouldn’t be required to have coverage (though I know it is more for the protection of the mtg companies than the homeowners). I’m digressing. It has been really hard here post-Katrina for people to get insurance. Most companies pulled out and the ones that are still around are charging through the roof. My aunt & uncle’s insurance bill went from $1000 a year to $3500 a year. It really is some of the best insurance you can get, and pretty affordable if you shop around to the right places.
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Posted by Rachel | August 24, 2008, 11:40 pm@Rachel: Insurance is a risky and weird business. It makes it so that you’re betting something bad’s going to happen (you’re going to die — probably a sure thing –, your house will burn down or flood, your car will crash) and the insurers betting it won’t happen.
I’m glad to hear that you have a great policy and that you’re covered.
Posted by MInTheGap | August 26, 2008, 2:07 pm