How to Choose Home Owners Insurance
Whether you are buying your first home or you are looking to replace the one you currently call home, or if you are a renter, you need to know about homeowner's insurance and the many decisions that go into choosing the right coverage. If you simply allow a salesperson to insure your home and its possessions, you might pay too much and possibly expose yourself to unnecessary risk.
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Things You'll Need
- Information about local building costs
- Your home's square footage
- List of expensive items for which you will need additional coverage
Instructions
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Make sure the home you rent is already covered by the property's owner. If it is, you will only need to buy a policy to insure your possessions as well as any damage to others that you, your family and your pets might cause. There is blanket coverage that will insure most of your possessions, but if you have items such as jewelry or furs that would be costly to replace, you might consider having special binders in your policy. And most policies provide at least $100,000 in liability coverage but you might consider raising it since it only costs about $20 per $100,000 in coverage.
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Factor in the cost of insurance when you make an offer to buy a home. For example, if your "dream house" has faulty wiring or plumbing because of age, these factors will affect your premiums. Consider where the house is located. If it is in an area where there are frequent hurricanes or fires, homeowner's insurance premiums are high. If you find a home in a part of the country where construction costs are high, you will pay a higher premium because rebuilding would cost more in the event of loss.
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Upgrade your homeowner's insurance coverage if you have a lot of possessions that are costly to replace. Just like renter's insurance, most homeowner's policies provide a limit on how much the company will pay. Having a "personal articles floater" for about $50 additional premium per year will protect you from loss.
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Realize that a liability claim by others can wipe out your assets. For instance, if a visitor should suffer a serious injury while on your property, he could sue you for more money than you are worth. You homeowner's policy provides inexpensive coverage to protect you if that should happen. Most policies have a minimum of $100,000 of such coverage, but you will sleep better if you have a lot more. Some experts suggest that you have a minimum of 3 times that amount to be safe.
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Be careful of the deductibles in your homeowner's policy. They specify the amount you must pay for any loss before the insurance company gets involved. If you have a high tolerance, choosing a higher deductible, say $1,000 instead of $250, can result in a significant reduction in premium. Ask your insurance salesperson for various premiums and coverages from which you can choose.
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