If you just bought a house, you probably budgeted for your mortgage, taxes, utilities, and even your homeowners insurance.
Homeowners insurance can often be purchased for the first year upfront, even before closing. Buying homeowners insurance before closing alleviates some of the financial strain of closing. You can already expect to write a pretty big check to cover your down payment, lawyer’s fees, and associated closing expenses.
You’ll also sign a gigantic stack of papers. If you can reduce the amount of that check by paying for homeowners insurance up front, and remove a few papers from that stack, it may be worth it. Other times, your lender manages homeowners insurance payments. The annual amount is divided by 12, added to your mortgage payments, and held in escrow until the bill is due.
It’s important to remember: Homeowners insurance is mandatory if you took out a mortgage to pay for your home. This is important to remember if you're a first-time home buyer. Whether you pay upfront or throughout the year, you’ll be happy you’re covered as it may help defray the costs of some of these all-too-common, yet often-unexpected, expenses.
Hidden & Unexpected Costs of Owning a Home
1. When Your Roof No Longer Keeps You Dry
Your home inspector should let you know the expected lifespan of your home’s roof. But the inspector’s estimate may be off. Additionally, storms, snow, heavy winds, or a situation called ice-damming can accelerate wear and tear on a roof. The roof may need replacing sooner than you would imagine.
Most homeowners insurance policies coverage includes replacement or repair of a roof if a storm, heavy winds, rain, snow or a tree falling on the roof caused the damage. However, a basic homeowners policy may not cover damage caused by a hurricane, flood, or earthquake.
If weather damages your roof, it pays to check with your homeowner's insurance company to see if you are covered. You might be pleasantly surprised! For instance, Sandy, which hit New Jersey on October 29, 2012, caused 19 billion dollars’ worth of damage and left 346,000 New Jersey homes damaged or destroyed. Sandy was not classified as a hurricane by the time it hit the Eastern Seaboard. Luckily for the homeowners who made insurance claims, it was deemed a “superstorm.” And that meant insurance carriers honored most claims.
Even though Sandy was named a “superstorm,” that doesn’t mean New Jersey residents will be so lucky next time. Hurricane season can bring unexpected expenses to New Jersey homeowners. It pays to inquire about additional hurricane and flood insurance to cover the cost of roof repairs or even a new roof.
2. When Your Hot Water Heater (or any other Major Appliances) Turns Off for the Last Time
Renters have the luxury of calling the landlord when the water heater, dishwasher, refrigerator, or other major appliance stops working. As a homeowner, you know these appliances become your responsibility. But it hits home (so to speak) when you find yourself dipping your credit card at the home improvement store five minutes to midnight to replace a broken appliance.
Homeowners insurance policies typically do not cover damage to appliances caused by normal wear and tear. But if your appliance broke due to accidental water damage (such as damage from the rain after your aging roof fell in), lightning or power surges, fire, smoke, a windstorm or even an explosion, insurance might pay for a replacement.
Another little-known bonus to having homeowners insurance? You might be able to make a claim and be reimbursed for all the food that spoiled in your refrigerator and freezer when it broke.
3. When You Didn’t Realize That Alarm System Had a Monthly Fee
Maybe you spaced out looking at the gorgeous wainscoting in the foyer and didn’t hear the previous owner when they disclosed the cost of 24/7 monitoring for the alarm system. Or maybe the homeowners didn’t mention the alarm system because they weren’t using it. But you realize it’s a good investment to protect your home and its valuables. With all the wiring in place, you realize it makes sense to turn on the service.
In either case, an alarm system could be a monthly expense you didn’t factor into your budget. Take heart, though. Having a monitored alarm system could reduce your homeowners insurance rates in New Jersey. Today’s high-tech systems can detect not just break-ins, but fires and floods, giving you peace-of-mind and enabling you to minimize damage in a worst-case scenario.
4. When That Beautiful Landscaping Needs a Facelift
Trimming trees, or having them cut down, is not cheap. But it’s important to budget for this cost. Pruning trees and shrubs not only make your property look nicer, but it can also reduce your chances of having to file an insurance claim for property damage after a storm.
A professional knows what to look for when pruning trees, and can trim any weak limbs or branches while assessing the tree’s overall health. And if a tree falls and causes property damage before you get a chance to prune it? Well, that’s why you have homeowners insurance.
Most policies cover property damage to your home and attached structures, as well as protection for other structures on the property, such as sheds and detached garages. Coverage limits for detached structures may be lower than for dwellings. You can talk to your insurance broker about increasing your coverage for that beloved man cave or she-shed and its contents.
It’s important to remember that policies may not cover property damage caused by trees or branches that fall during a hurricane or earthquake.
So Many Expenses…
Owning a home is expensive. Fortunately, affordable homeowners insurance is within reach to provide the coverage to give you peace of mind in any situation.