Consider insurance costs before purchasing a home

October 29th, 2012

Consumers should understand whether additional insurance is recommended and the cost of these riders before buying a home.

Consumers who are in the market for a new house typically gauge the costs of their investment by discussing interest rates, closing costs and fees with their mortgage service company. However, the costs of protecting their asset is another considerable expense that should weigh heavily on their choice of home and location.

As Hurricane Sandy reaches the East Coast, insurance experts have noted that many homeowners in coastal or low-lying regions may mistakenly misunderstand what their property insurance actually covers, according to USA Today.

“The key thing is, you’re covered for wind damage,” Mike Barry of the Insurance Information Institute told the news source. “[B]ut you need to know your responsibility and the insurance company’s. It’s changed a great deal over the past 20 years.”

Many of the damages caused by natural disasters – ranging from hurricanes and tornadoes to floods and earthquakes – are not included in standard policies and requires riders or supplemental insurance.

While these additional policies are not always mandated, those living in risky areas are encouraged to research the cost of these policies before making a decision about their home purchase. Failing to purchase extra protection can strap homeowners with the heavy costs of repairs or rebuilding.