How to Buy a Home Insurance Policy Intelligently

Home insurance is one of the most expensive ongoing costs of owning a home. Here are tips to choose a policy.

Difficulty: Easy

Instructions

1. 

   The first step is to accept that to the insurance company you are no a person. You are a statistic with a set of risks such as history of claims, history of neighborhood where the home is located, etc.

2. 

   Next think about what your home's value is. It is critical to establish your home's replacement cost so that you do not overinsure (pay too much) or underinsure (and end up with too little coverage). A great way to do this is to talk to local builders.

3. 

   Next compare the companies by price and rank your top 10 companies based on prices.

4. 

   Now go to consumer reports and the state licensing board to see how the insurers compare. Some insurers have better records for paying claims and some have a history of not paying claims.

5. 

   Talk to your insurer about discounts such as multi-line discounts, professional degree discounts, and loyalty discunts.

6. 

   Look at the details of all the possible insurances. Some cover a home's content up to 50% to 75% of the home's value, others cover more or less. You need to decide what you need.

7. 

   Consider maximizing the deductible and minimizing replacement cost coverage to minimize your premiums. Realize that you need to insure any risk you can not afford so in some cases you may not be able to do this.

8. Look at what liability is included. Does the policy protect against lawsuits? You may consider umbrella liability coverage policies.

9. Consider if it provides living expenses if you are displaced.

10. Look to see if flood or earthquake insurance is covered or not.

11. Look at the company's financials. You can check this on Standard and Poor's or the AA website. This will help ensure that the company will be able to pay you when you make a claim.

Tips & Warnings

• Maximize deductibles
• Look for discounts
• Check the company's financials.

[missnye]

on 11/19/2009 I wish I had more options. I live in a 60 year old house that few companies are willing to insure.*****

[mikes197131]

on 11/17/2009 5*, I just went through this, and you were right on.

[barbarastanley]

on 10/29/2009 Great advice on buying homeowners insurance. These tips will help quite a bit. 5*

[tachic]

on 10/10/2009 Great tips to buy a home insurance policy.

[jenng]

on 9/27/2009 GREAT ARTICLE ON How to Buy a Home Insurance Policy Intelligently 5*