7 Things You Need to Know about Homeowners Insurance

7 Things You Need to Know about Homeowners InsuranceYou’ve bought your first house, and you are over the moon. It is your dream home, and you want to protect it. You need homeowner’s insurance. Here are 7 things you need to know about homeowner’s insurance before signing on the dotted line and handing over your premium check.

  1. Shop around for coverage and price. Different companies will offer a range of rates and different coverage options. Ask your real estate agent, your lender and home owning friends for suggestions. Ask for quotes, and compare the price and coverage before making your decision.
  2. Compare deductibles. A company that offers you a lower deductible could come with a higher price tag per month. You can save some money on the coverage with a higher deductible, but weigh that against the risk of a possible claim. If you have to file a claim, will you be able to afford the deductible?
  3. Know how much coverage you need. How much coverage you need depends on your home, its contents, your risk and the type of insurance you need. Consider what items you need to cover. For example, do you have a home office or a home theater with expensive electronics? Do you expensive collections which would be difficult, if not impossible, to replace? You’ll have to cover at least the balance of your mortgage, but you are likely to want coverage above and beyond that.Bankrate.com says that your homeowner’s policy should include 6 types of coverage: dwelling, other structures like a freestanding garage or fence, personal possessions, loss of use, personal liability and medical payments. When asking for price quotes, ask the insurance agency what they recommend. You can also do some research on your own to see if what the agency is telling you seems reasonable. Bankrate.com recommends an amount of dwelling coverage that is equal to the full replacement cost of your home.
  4. Identify any extra coverage you may need. If you live in a disaster-prone area, you may need additional coverage, like earthquake insurance or flood insurance. Ask your insurance agent what is included in your policy, what is offered under specialty policies, and what the agent recommends.
  5. Consider replacement cost versus actual cash value. Some companies will give you the option to insure your home and belongings for the cost to replace the item, or actual cash value. Replacement cost will cover what it would take to replace or rebuild your home, or repair damages with similar materials. Replacement cost will not deduct for depreciation, but actual cash value will.
  6. Ask your agent about discounts. Some insurance companies will offer packages or bundles, which could save you money if you choose to get car and homeowner’s insurance from the same company.
  7. Read your policy carefully. Your policy is a legal document, and you should double-check that your rights and responsibilities are clearly stated. Make sure you understand its contents, what coverage your policy includes, and ask lots of questions.

Homeowners insurance is critical to protecting your home. These 7 tips will help ensure you have the right policy to protect your most important asset!



Marti Reeder, Realtor, Managing Broker