These helpful tips will make it easier to understand your insurance coverage when you’re building a new home. You’re not always as covered as you believe that you are. It becomes an issue when you were counting on insurance to help you out of a problem situation.

Check on Insurance Prior to Building or Buying

Unfortunately, insurance is one of the last details a potential home owner will consider when purchasing or building. Often, a homeowner will have life, car and renter’s insurance through one company. They believe it won’t be an issue to get insurance for a new home only to find out that there were issues with the home’s location or other unforeseen circumstances that can get in the way of insurance. This can be avoided by checking with an insurance company before completing any details or steps in the purchase.

Building a Home Costs Less for Insurance

Insurance companies love new builds. They will often give you massive discounts on the policy for a new home compared to an existing home. The insurance company will give the largest discount in the first year, which steadily declines as the home ages. It’s a great bonus when a new homeowner is starting out since they’ll receive coverage for a lower price exactly when they need it most.

Insurance for Building a Home

Your builder’s insurance will cover many of the contractor’s risks like unforeseen issues with weather and construction costs. That policy doesn’t cover everything as it relates to the home. It’s important that you don’t rely on your contractor’s building insurance for coverage on your home as its constructed. Ask about a construction policy for your home, so you’ll know what you’re covered for and what isn’t covered in the event of a disaster or emergency.

Actual Cash Value Policies

When you are shopping for insurance, you might be looking for the cheapest policy so your premiums are not incredibly expensive each month. Unfortunately, a cheaper policy means you’re not going to be getting full coverage that you’d expect. Actual cash value, or ACV, policies will only reimburse you for the perceived value at the moment. It won’t cover the cash you’ll need to get a replacement. You’ll receive the value of a home that has depreciated items. For example, a 10-year-old hardwood floor might be worth $10,000, but a replacement floor of the same type will cost $18,000. That means you’ll only get the exact cash value of the item, not the replacement costs.

Build Smart to Save

You should never skimp on your insurance coverage to save money. When you’re on a strict budget, you should find other ways to build inexpensively. Use materials that are less luxurious but still beautiful and affordable. Talk to your builder about how money can be saved through smarter choices like siding, roof and floor material choices.

Consult with a builder like Alair Homes Edmonton to get the best home you can for your budget. Don’t take shortcuts when it comes to your insurance coverage to make up for a high building or home buying budget.