Home Buying & Insurance Coverage

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Buying a home is possibly the best investment you can make for you and your family. Whether you are moving from renting to buying, purchasing a new house, or simply relocating, you are no doubt weighing different factors such as price, size, neighborhood, etc. Another decision to weigh is homeowners insurance. Below are some things you might want to consider before making your home purchase. (Features may differ by state and by policy type. Please see your policy contract for details.)

How much coverage do you need?

You'll want insurance that covers the cost of rebuilding your house in the event that it gets destroyed.
  • If you purchase a home that has many upgrades, it may cost more to rebuild due to a shortage of materials or specialized labor. Farmers has a Homeowners policy which offers up to 125% extended replacement cost, meaning that you may receive up to 25% above your dwelling limit in the event of a covered loss and if you feel you need even more coverage, Farmers offers a policy with up to 150% extended replacement cost, meaning that you may receive up to 50% above your dwelling limit in the event of a covered loss.
  • If you purchase an older home, it may need to be rebuilt according to today's building code standards, adding to the cost. Policies from some competitors may only cover reconstruction cost, but the Farmers homeowners policy includes an additional 10% above the reconstruction cost to cover for additional expenses due to building ordinance or law.

The primary factors that will determine that cost include:

  • Local construction costs and the square footage of the structure
  • The type of exterior wall construction-frame, masonry (brick or stone) or veneer-and the type of roof
  • The style of the house (ranch, colonial)
  • The number of bathrooms and other rooms
  • Attached garages, fireplaces, exterior trim and other special features like arched windows.

Estimating Rebuilding Costs

Below are some tips to help you estimate the cost to rebuild your home:
  • Every year, take the time to check the value of your insurance policy against rising local building costs. Your Farmers agent is available to review your coverages with you so that you can make sure that adequate protection is in place.
  • Check the latest building codes in your community. If your home is severely damaged, you might have to rebuild it to comply with the new standards requiring a change in design or building materials.
  • Do not insure your home for the market value. The cost of rebuilding your house may be higher (or lower) than the price you paid for it or the price you could sell it for today.
  • Some banks require you to buy homeowners insurance to cover the amount of your mortgage. Make sure it's also enough to cover the cost of rebuilding.
  • Increase the limit of your policy if you make improvements or additions to your house. You may upgrade features in your home to fit your tastes and lifestyle. These enhancements can significantly increase the replacement cost of your home. Your Farmers agent will be available to help you in your determination of whether additional coverage is needed.

If you have questions about the amount of coverage you should have, consult your local Farmers agent.

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What coverage do you need for yourself and your family?

If you are responsible for damage to someone else's property or for someone else's injuries, you are covered by your Farmers homeowners policy. It protects you and your family against property damage or bodily injury claims for which you are legally responsible. Liability insurance covers you, for example, if someone slips and falls on your property or if your dog bites someone.

Today, when multimillion-dollar lawsuits are common, your homeowners policy may provide substantial liability limits, but it may not be enough. Farmers Personal Liability Umbrella supplements your present policies and provides additional coverage in increments of $1 million.
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What coverage do you need for your belongings?

If your things are stolen, damaged or ruined, you'll want insurance that provides coverage to replace them. In a covered loss, the Farmers homeowners policy can pay for them at replacement cost, while policies from some competitors only cover actual cash value (which means replacement cost minus depreciation). In addition, Farmers will offer reward for information which leads to conviction of arson, burglary and vandalism in connection with your covered loss.
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Do you live near a flood zone?

Inclement weather can come at a moment's notice, bringing with it water that can damage home and belongings. Unfortunately, most homeowners policies do not cover flooding.

Find out the facts and then see your Farmers agent about flood insurance. If your neighborhood is prone to flooding, flood insurance may help you to mitigate a loss.
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Do you know what impact a particular house has on your insurance premium?

Some types of homes can qualify for a discount, thus reducing your insurance premium. At Farmers, there are a variety of discounts that may save you thousands of dollars over the time you own your home. They include the following:
  • New Home Discount - If your new home was constructed in recent years, you may get a break on your premiums.
  • Home Renovation Discount - If your new home was constructed long ago but the heating & electrical or plumbing systems were recently renovated, you may be entitled to a discount.
  • Protective Devices Discount - If your new home has burglar or fire alarm that contacts a central alarm company when triggered, you may get a reduced rate. Or if you have an automatic sprinkler system inside your house that activates in the event of a fire, you can get a discount.
  • Fire Safeguard Discount - If your new home has automatic shut-off values professionally installed on all gas or propane lines, you can get a lower premium

Find out what discounts you may be eligible for in your state.
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Can the type of home affect insurance premiums?

Certain homes, even if they don't qualify for these discounts, may have lower insurance premiums than other homes because of certain features. These include:
  • More disaster resistant components - If your new home has a reinforced roof made of stronger material, you may get a lower premium. In the East, a brick house may withstand wind damage more easily, whereas in the west, a frame house may hold up better against earthquakes. The right house in the right location may lead to lower premiums, not to mention a home that you can still go back to.
  • Robust fire-fighting facilities nearby - Homes near a fire hydrant and close to fire stations with a professional staff may have lower insurance premiums than those close to volunteer fire departments or far from any fire station or fire hydrant.
  • Low-risk location - Homes in some areas, such as coastal Texas or the Alabama waterfront, are vulnerable to storms and will therefore have higher premiums. Similar homes, just a few miles inland, may have lower premiums.

You may want to keep in mind the above information as well as the discounts available to you when purchasing your new home as the type of home you purchase can affect the amount of premium you will pay.

Even if you have fallen in love with a home that has a high insurance rate, your local Farmers agent can review your policy with you to see if you qualify for any other discounts not mentioned here or discuss with you other ways that you may be able to reduce your premium.
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*Discounts apply to selected coverages, perils and policy types. Eligibility and actual percentage of discounts may vary.