Insurance: What is it good for?

Homeowner's insurance. How easy, right? I mean, you see dozens of commercials each month, even on basic channels, advertising different providers of home insurance.

It may be easy to some, but to us, insurance was something fairly new and complicated. We only knew one type of insurance. Well, to put all cards on the table, I suppose we knew two types: Health insurance and renter's insurance. The first was pretty much a necessity, and the latter was something we always speculated about and never actually committed ourselves to sign up for.

Even as novice first-time home buyers, we knew we would need home insurance. However, that was the extent of what we knew. We knew it was necessary, even beyond the bank's closing requirements. However, even though our financing bank we would be doing extensive demolition of the home, they didn't specify their home insurance requirements- they really seemed to only want proof of some type of insurance.

I was very honest with the first few providers I called to get quotes. I recounted what type of work would be done to the home and immediately was told that they didn't provide insurance for homes in that condition.

Call after call.

Referral after referral.

We finally found out what we needed: Builder's Insurance and Liability Insurance.

"Obviously", some might say. Well, how were we to know? We are pretty sophisticated "googlers" and not even then could we get a clear answer.

I called the bank after hearing this and tried to confirm with them - would they accept these two insurances in lieu of traditional "homeowner's insurance". They confirmed that they simply needed to validate "insurance" and this would be fine.

I won't explicitly give numbers, as the point of this blog is to be more informational than financial, but I can affirm that these insurance policies are far more expensive than traditional homeowner's insurance. By "far more", I mean considerably more. And by considerably more, I mean... Well, how to put it into perspective. Traditional homeowner's insurance seemed to be "X" amount. This insurance was multiples more.

I guess this protected us against the home falling down, or someone walking into our demolished home and hurting themselves?

Regardless of what this policy provides, I feel it proves what most say when they start construction. Take what you think it will cost, add 30%, and if it comes in around there, feel thankful.

And we are just at the beginning. :)