When you seeking to purchase a new home, one of the biggest factors you'll want to consider is home insurance. While taking out a home insurance policy isn't legally mandatory, it is virtually always required by mortgage lenders who are understandably looking to mitigate the risk of their loan as much as possible. Keep reading below for a few of the most important questions you should ask your home insurance agent before the close of escrow.

Have there been any prior claims on the home?

While it may seem unfair, filing a claim on a home can drive up future rates considerably. That means that new homeowners may be subjected to insurance rates that are significantly higher than average, yet not even be aware of this before the close of escrow. That's why it is so crucial to ask your home insurance agent about the extent of the claims history on the property you plan to buy. Not doing so can mean paying thousands more in insurance than you had planned.

What specific kinds of insurance does the policy cover?

Many new homeowners who have never had to take out an insurance policy before may assume that a policy covers any and all types of damage to their homes. While this is true to some extent in many cases, it is not true in others. For example, many basic policies do not cover damage caused by flooding. Ask your home insurance agent if you need to purchase additional coverage for flooding, fires, or other similar events.

Do you suggest purchasing supplemental liability insurance?

Liability insurance is another type of insurance that is often included in basic home insurance policies. In cases where another person has blamed you for an injury they have suffered on your property, liability insurance can cover associated legal costs you may accrue, as well as medical bills for the injured person if you are found to be at fault. In cases where the basic policy limit is quite low, however, your home insurance agent may recommend purchasing supplemental liability insurance that increases the amount of coverage. The peace of mind this can bring is often worth the small monthly surcharge.

Making assumptions about your home insurance policy and the payments you'll make can often lead to disappointment and confusion after the close of escrow. It is wise to sit down with a home insurance agent and ask all of the above questions, as well as any others you may have.

Contact a local home insurance service, such as LH Griffith and Company, to learn more.