Whether you’re a first-time buyer or a longtime homeowner, purchasing a new home is an exciting process. Going to open houses or visiting homes for sale with a real estate agent allows you to see what qualities you want in your future home and what features you don’t. Finding your ideal new home and beginning the purchasing process is exciting, but it can also be stressful. Overthinking about prices, preparing for home inspections, and mortgage requirements may take away from the fun of purchasing a property.
Although it is not necessarily required by the law, getting house insurance is sometimes neglected in the extensive list of things to complete before buying and moving into your new home. Obtaining homeowners insurance prior to closing is a critical step in the home-buying process that should be prioritized especially if you get a portion of your funds from a house loan.
Mortgage lenders will refuse to lend you funds unless you can show proof that you have purchased this form of insurance.
Before we dive in when is the best time to get a home insurance?
In most cases, house and lot property insurance is purchased prior to closing on a house. You can protect your new home from disaster by getting the coverage you need before you even move in. It’s crucial to compare different insurance policy alternatives because they may provide varying levels of coverage. Once you’ve discovered the suitable insurance for you, make sure it fits your lender’s needs. Most banks will not finance a mortgage or a home equity line of credit unless the property is insured. Some lenders may even require you to acquire additional coverage in addition to a standard homeowners insurance.
You can get insurance after confirming that the coverage limit (based on replacement cost values) you choose fits your lender’s standards. This should be completed before you attend the closing meeting for your house. When the final closing date approaches, the insurance provider will usually pre-approve the policy and wait for your escrow/title firm to issue a Proof of Insurance request. Before the closing date, the insurance company will email or fax coverage confirmation.
Note that covering the full replacement cost is better than just actual cash value.
Policies of the best home insurance in the Philippines include four (4) essential types of coverage:
1. Interior and Exterior Damage of the House
The best home insurance will reimburse you if your residence is damaged by fire, hurricanes, lightning, vandalism, or other covered calamities. Floods, earthquakes, and poor property upkeep are typically not covered, and you may need to purchase additional policies if you want that sort of coverage. Freestanding garages, sheds, and other structures on the property may require their own coverage, following the same standards as the main home.
2. Personal belonging coverage
The best home insurance will protect you if your furniture, clothes, sports equipment, or other personal belongings are stolen or damaged due to allied perils such as fire, storm, falling aircraft, or other insured calamities. Most insurance providers cover 50 to 70 percent of the cost of a home’s structure insurance. Off-premises coverage is included in this section of the insurance. This implies that unless the policyholder is in a location the is off the coverage of the policy, their things are insured anywhere. Jewelry, furs, and silverware are normally protected, however there are usually cost restrictions if they are stolen. Individuals can acquire a specific personal property endorsement or floater and insure the item for its appraised value to insure these goods to their full worth.
Standard homes insurance will cover trees, plants, and shrubs. Theft, fire, lightning, explosions, vandalism, riots, and even crashing airplanes are all covered. They are not protected from wind or illness.
3. Liability Protection
The best home insurance will protect policyholders and their family members from claims for bodily harm or property damage they cause to others. It also covers pet-related damage, whether your dog accidentally bit your neighbor or your house visitors. Up to the policy’s agreement, the liability details of the insurance covers both the expense of defending the policyholder in court and any court hearing. Basically, it is an insurance that will protect you from a lawsuit of others.
4. Additional Living Expense
The best home insurance will cover your expense if your residence is uninhabitable due to damage from a fire, storm, or other insured events, this covers the additional costs of living away from home. While the house is under renovation, it covers hotel room costs, daily meals, and other living expenditures. The amount of coverage for additional living expenditures varies per employer.
Optional Home Insurance Coverage:
Fire Insurance
A fire insurance protects your home in case of fire accidents. Fire insurance policy usually covers direct loss or damage to a particular property caused by an insured peril during the covered period.
Flood insurance
protects your home and possessions from damage caused by flooding. It’s a different insurance with a deductible of its own. If you reside in a flood-prone state or area, this coverage is a smart idea, and depending on your location, it may be needed.
Earthquake insurance
protects your home in the case of earthquake damage. This coverage has its own deductible as well.
Replacement cost plus
is an additional level of coverage that can help you rebuild your house after a total loss. If you’ve had your home for a long time and are concerned about depreciation, adding additional replacement cost coverage to your policy can be a smart option.
Sewage or drain backup
which is an undesirable but frequent problem for homes, water backup of sewer safeguards your house.
Other structure insurance
protects anything that isn’t linked to your house, such as a gazebo, shed, or detached garage. If you have any of these buildings on your property, you should insure them to prevent having to pay out of cash in the event of an accident.
Personal umbrella liability
protects beyond the policy limitations established in your basic homes policy, insurance offers additional coverage for physical injury, property damage, malicious damage, and personal harm to others.
Medical payments coverage
may cover medical expenses incurred as a consequence of an accident on the customer’s property. This coverage is meant for rapid medical care of customers’ visitors on their premises, regardless of fault.
Ordinance or law insurance
it is implemented if you need to reconstruct your home to meet current building rules after a covered loss. If you have an older house, it may be a wise decision.
Brand New Belongings
is an optional add-on endorsement that can help you restore or replace specific belongings following an insured loss without taking into account of deterioration or depreciation.
Better roof replacement
It is an optional coverage that can help you repair your roof to be stronger and safer.
Now that you get the basic grip of knowledge you need to know before acquiring home insurance, listed down below is the list of home insurance companies in the Philippines.
Authorized Insurance Companies as of 31 October 2022:
Source: Insurance Commission Philippines