It may not be as exciting as shopping for a home, but insurance should always sit at the top of your to-do list. Banks will want proof you’ve arranged home insurance before settling, and you and your family need to be well protected.
Why you need insurance
Natural disasters like flooding, fires or earthquakes are out of your control. Banks want your home to be covered because they need to guarantee the asset. But what about hospitalisation, illness or emergencies that could affect your ability to work or repay your loan? Saving for a rainy day is great, but with an asset this big, it’s much safer to get full insurance cover. That means you’ll always be able to repay your mortgage, no matter what happens.
Get quotes before you go unconditional
When applying for a mortgage, you should also apply for insurance. Yamini advises buyers to ask for home insurance quotes as soon as they find a house they like.
“An insurance application can take time. It’s best to have it ready, so you don’t have to push out your settlement date.”
The process can also be a form of due diligence, helping you decide if the home you like is a good investment.
“Some houses will be a higher risk if they are near the coast or in a flood plain. These are the things you want to know before going unconditional.”
Consider life, health and income insurance too
Your bank won’t require life, health and income insurance, but they’re a smart idea. As with getting married or having a child, buying a home triggers the need for more security. If you have anyone relying on your income or this home, life insurance could be what keeps a roof over your family’s head. And income insurance could save the day if you can’t keep working. Read more about essential types of cover here.
Ask your current provider for more information
If you already have contents or car insurance, reach out to your provider and ask what else they can offer. Do they have home, life and health insurance combo deals? As you’ve already been assessed, the existing relationship helps speed up the process. Yamini notes that being organised doesn’t mean you have to pay money before you need to.
“You can ask for the policy to begin straight away or when you go unconditional. Most importantly, you’ve done the leg work, so it’s ready to go when needed.”
How much cover do you need?
There are a few things to consider about the coverage you need. Start by asking yourself who and what you need to protect and ensure the coverage level is sufficient to pay down your mortgage. Then, you can add other costs like schooling and retirement as you go.
Buying a home is a momentous life event. It makes sense that you should protect it against whatever life throws at you. Start early and explore all your options with an insurance broker. They can assess your needs, risk appetite and the best products available, so you know you’re getting the right policies at the best prices. Once insurance is sorted, you and your family will sleep easy, knowing you’ll always have a roof over your head.
Need advice on the best insurance policies for you? Speak to a Global Finance expert today.
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