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Upon purchasing a house, it’s important also to buy a homeowners insurance policy. Most lenders require proof of coverage before closing. As such, it’s best to familiarize yourself with the ins and outs of homeowners insurance before buying a house. To help you get started, here are some critical terms all first-time buyers should know. 

Do You Know These 5 Homeowners Insurance Terms?

1. Binder

A binder is a temporary contract that represents the anticipated agreement between the insurer and policyholder. Lenders typically require binders as proof of insurance before issuing mortgages. 

2. Third-Party Claimant 

Third-party claimants are those who file claims other than the policyholder. For example, if your dog bites your friend on your property and they decide to file a claim with your homeowners insurance provider, they would be a third-party claimant. 

3. Deductiblehomeowners insurance

A deductible refers to the dollar amount of damages that you’re responsible for before your coverage begins. Higher deductibles yield lower premiums because the insurer has less financial obligation to the policyholder. 

4. Betterments

Betterments are permanent improvements that increase the property’s value. Examples include additions and remodels. If you add any betterments, you must increase your total coverage to reflect the new value of the property. 

5. Real Property 

Real property can refer to land, as well as any fixed structures erected on it like houses, sheds, and garages. Personal property, on the other hand, encompasses all the items in these structures, like furniture, clothing, and jewelry. 

 

The friendly team at Town and Country Insurance Agency will demystify the homeowners insurance process when you’re ready to buy a house. Based in Waynesboro, VA, and serving clients throughout Augusta County, this agency is backed by more than two decades of experience. With affordable rates and flexible terms, their tailored insurance policies come with everything you need and nothing you don’t. To request a quote, reach out on their website or call (540) 221-2465. 

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