Home Insurance: An Overview for First Time Home Buyers

There are countless things to consider when buying your first home. Is the home in a good neighborhood for raising children? What is commuting? Can you afford it? How about making sure your new home and its contents are adequately protected? Analyzing the ins and outs of your homeowners insurance policy may not be top of mind in the midst of closing on your first home, so we’ve broken down some important things you need to know.

Basic coverage

Standard homeowners insurance policies protect your home against damage or loss due to fire or lightning, storm or hail, theft, smoke damage, broken glass, falling objects, weight of snow, ice or sleet, and electrical damage up to a certain amount in dollars. It also covers your personal belongings up to a certain amount.

Replacement cost coverage

If your home is destroyed, a standard homeowners insurance policy will cover the cost of rebuilding your home and also cover the additional living expenses you incur while it is being rebuilt. Replacement costs include the cost of labor and building materials, but do not subtract depreciation, so they are based on today’s costs. Although it takes inflation into account, it only covers up to 100% of the cover amount you set for your policy.

Additional replacement cost coverage

Some insurance companies offer additional replacement cost coverage, which includes the cost of labor and building materials, without limitation, and takes inflation into account. This is the only option that guarantees you will be able to rebuild the same house in the same location without having to pay out of pocket for repairs.


Your deductible is the amount of money you pay yourself before your insurance goes into effect. It can range from $100 to $10,000. If you choose a low deductible, you are taking on less risk, so your premium will go up. A higher deductible means more risk for you and your bill goes down. When deciding on a deductible, homeowners should consider their ability to pay out-of-pocket expenses at the time of the loss. Higher deductibles lead to lower premiums.

Liability and medical payments

Liability and Medical Payments Liability and Medical Payments coverages are automatically included with each of our home insurance options listed above. Liability coverage protects you when people other than those who live in your home are injured while on your property.

Flood and earthquake

Homeowners insurance does not cover flood damage from natural phenomena such as tidal waves, rainfall, or even sewer restoration. Flood insurance can be purchased through the National Flood Insurance Program and is required if your property is located in a flood zone. However, water damage to your home due to frozen pipes, broken appliances or an overflowing bathtub is usually covered. Property damage due to an earthquake is also not covered by a standard homeowners insurance policy. It must be added as a separate endorsement or policy and may be subject to a separate deductible. Most states offer a separate earthquake permit.

Umbrella Insurance

Umbrella coverage is additional liability protection that extends to both auto and home policies to cover certain risks that may exceed these limits or are not covered by either policy, such as defamation, false arrest, defamation and others.

Fine jewelry

Just like most insurance policies cover damage to your home up to a certain dollar amount; valuables are also covered only up to a certain dollar amount. If you have fine jewelry, expensive artwork, or valuable heirlooms, you’ll want to list them separately so you can maximize protection for these high-value items.


If your friend slips and falls on ice on your property, the medical payments on your home insurance policy will usually help cover medical claims made. However, if you or another resident falls on the same patch of ice, your health insurance will begin to cover these claims.

Home business

If you run a small business out of your home, it’s important to purchase a separate insurance policy or add coverage to your current home policy to cover any business liability or equipment. These items are usually not covered by your standard home insurance policy.

Like most other insurance policies, your home insurance has limits on what is and isn’t covered. Your policy can provide you with coverage for many different risks you face as a homeowner, but what is protected varies depending on the policy you choose. Ultimately, take the time to thoroughly understand your home insurance policy. Check with your insurance agent to learn about the exact coverage you have. Be sure to ask questions because every state and every house and situation is different.

Contact one of COUNTRY Financial’s Colorado branches in Fort Collins (970) 221-9655, North Denver (303) 940-6864 or South Denver (303) 368-5202 with questions.

Home insurance policies issued by COUNTRY Mutual Insurance Company®, Bloomington, IL.

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