How To Protect Your Home From the Unexpected
After pouring all your money into buying your new place, you’re probably hoping that nothing breaks down. How can you best protect yourself and your house from all the potential destruction (I mean responsibility!) that comes with homeownership? Here are three options I recommend:
1. Homeowners Insurance
Who should get it: If you are purchasing your home via financing (aka you are not buying it in cash), this one is required by most lending institutions!
What is it: Homeowners insurance protects your home against disasters aka it covers the cost of rebuilding your home if something happens that will damage or destroy your home (like a fire, a tree falling, etc.). Keep in mind that in order to file an insurance claim, the event that happens to your home (for example the fire that destroys it) has to be “covered” under your insurance plan. Before purchasing your home, you as a buyer will be required to select a insurance company. Do your research on what these plans cover that are specific to where you live and what type of home you will buy.
How much is it: The cost of the homeowners insurance is usually bundled into your monthly mortgage payment. In Maryland, the average homeowner’s insurance is around $100/month.
2. Home Warranty Plan
Who should get it: I strongly encourage all new homeowners to get this at least for the first year of owning their home. Otherwise, if you are someone inheriting a home with older appliances and systems, I also think this a must for you!
What is it: A home warranty plan is a service contract with a home warranty company that protects the major appliances and systems in your home. This means, if you have a leaky faucet, your refrigerator stops working, or your Central A/C unit dies, they will come and repair or replace it. This can save you $$ if you’re not in a position to pay let’s say $7,000 for a new Central A/C system or $1,200 for a new water heater (me!).
How much is it: The warranty itself has a monthly cost, between $50-$100/month. Then when you file a claim, there is an additional fee for the person to come out to diagnose the issue (usually between $50-$100). However, the repair or replacement of the item is FREE (if it’s covered!) Always remember to do your research and pick the right plan for your home!
3. Exterior Line Coverage
Who should get it: I honestly think this is beneficial and cost-effective for anyone! But in particular for those with old houses/exterior lines that are old or people living in areas with lots of trees (where roots could get into the lines).
What is it: Exterior line coverage is contract between you and a company that protects the exterior lines connected to your home: your water line and your sewer line. Essentially, if at any point they fail, the company will cover the cost to repair or replace them. How much does it usually cost to replace a water or sewer line without exterior line coverage? It starts around $3,000 and can be upwards of $10,000.
How much is it: In Baltimore City, HomeServe covers both lines for $55/year—-that’s about $5/month.
