Top Tips for Purchasing Homeowners Insurance

If you own a home, you are going to need homeowners insurance. Homeowners insurance covers your home and everything in it in case disaster strikes. It also includes temporary living expenses should your home become uninhabitable and some liability coverage in case someone is injured in your home. When purchasing homeowners insurance, keep the following in mind.

Make Sure You Buy Enough Homeowners Insurance

You need to be sure you have enough insurance to cover the rebuilding of your home should it become destroyed. The homeowners insurance your mortgage lender requires may not be sufficient. Find out the building cost per square foot in your area from your local builders association or real estate agent to calculate how much homeowners insurance you need to carry.

Make Sure You Have Adequate Homeowners Insurance Coverage

Typical homeowners insurance coverage protects you from things like fire, theft and lightning. It does not protect you against floods or earthquakes. If you need this kind of protection for the area where you live, you will have to purchase it separately.

Know the Difference Between Cash Value and Replacement Cost

In a cash value policy, the policyholder is reimbursed for the actual cash value of any destroyed items, with depreciation due to age factored in. In a replacement cost policy, items are replaced with new, like items. You won’t have to worry about the current value of destroyed items with a replacement policy. However, as you might expect, they are a little bit more expensive, about ten percent more than a cash value policy on average.

Consider Floaters with Your Homeowners Insurance Policy

If you have some especially expensive items in your home such as rare coins or jewelry, your policy’s personal property coverage may not be sufficient. You can buy floaters to your policy to add extra coverage on those particularly expensive pieces of property.

Compare Homeowners Insurance Companies

Different insurance companies may offer a variety of different types of coverage at different rates. You can go online, find a mix of companies and see what they have to offer. Once you’ve gotten a few quotes, meet with an agent to discuss a policy. Make sure that all aspects of the policy are explained clearly and that the agent can answer any questions you may have. If you’re not comfortable with the agent, don’t be afraid to go out and get another one. The time to worry about your homeowners insurance policy is before you need it, not after.