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Shopping For Home Owner's Insurance

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Shopping For Home Owner's Insurance

As a homeowner, you have a choice when it comes to buying insurance on your home. You have a choice of companies and coverage. Your real estate agent or escrow agent might recommend an insurance company, but it's a good idea to shop around to get the best coverage and price for homeowner's insurance.

Ask your friends, family and colleagues what insurance company they have. Ask them if they are happy with the company, if they have any complaints, and if they have filed any claims. One of the most common complaints consumers have about insurance companies is how a claims process is handled.

The coverage you purchase will cover your home, your personal property, other structures such as a shed or a fence, medical payments and loss of the use of your home.

Here's some guidelines to help you when you are ready to purchase homeowner's insurance. But first, many people question why they need homeowner's insurance.

Why Do You Need Homeowner's Insurance?

If you are financing your home, your lender will require it.

If you're paying cash for your home, it's still a good idea to get insurance.

Here are the five common parts of homeowner's insurance coverage you need to know about:

1. Dwelling or Structure- Ask yourself how much it would cost to rebuild your home in its current location if there was a total loss.

Your homeowners insurance should cover the cost of building you a new home. Your insurance agent should know your neighborhood and be familiar with the replacement cost. Remember, earthquake and flood coverage are purchased separately.

The amount of you pay for this portion of your homeowner's insurance is what will pay for damage to your home and to any structure that is attached to your home, like a garage, patio or balcony.

The amount of this coverage should be the same as the replacement cost of your home. Remember that this coverage is not the market value of your property - it does not include the land.

2. Personal Property- The portion of your homeowner's insurance policy is based on the contents of your home - your personal property. Make a list of the items you own including appliances, TVs, computers, laptops, printers, sound systems, furniture, clothing, jewelry, outdoor equipment such as lawn mowers, and sports equipment like golf clubs, golf carts, etc.

It's not easy to put a value on the items, but you can estimate by finding the receipts when you bought the items or go online and find out approximately how much the items are worth.

It's also a good idea to videotape the contents of your home. We never really think about what we have until something terrible happens like a robbery, fire, tornado or other natural disaster.

The amount of coverage for your personal property is usually based on the amount of insurance you have on your home.

The percentage of personal property coverage varies. Some insurance companies offer 50% of your dwelling coverage as the limit of your personal property insurance, while other companies offer more or less.

For example, your dwelling (home) coverage is $150,000. The insurance company will allow 50% of that amount to insure your personal property or $75,000. Be sure to ask your insurance agent what the percentage of coverage is for insuring your personal property.

3. Other Structures- Other structures include sheds, carports, fences, unattached garages. You should consider insuring other structures on your property. If you have other structures, ask your agent how much will be added to your insurance policy to cover the items.

4. Medical Payments- You can purchase coverage that will cover medical payments for anyone that gets hurt on your property. If someone comes to your home for a visit and slips and falls or gets hurt, this portion of your policy will help pay for their medical expenses.

5. Loss of Use- You can pay an additional amount for insurance coverage to cover the cost of the loss of use of your property. If your home is damaged due to a tornado, fire, flood, etc., you can pay for insurance that will help you pay for some of your living expenses if you have to stay in a hotel while your home is being repaired.

Bottom line, be prepared and armed with knowledge when you're ready to buy homeowner's insurance. A trusted and knowledgeable insurance agent will help you determine the amount and type of homeowner's insurance coverage is best for you and know that you know the different types of coverage, you'll be in a position to make a good decision.