How to Buy Homeowners Insurance

You can’t be approved for a mortgage without homeowners insurance which will cover you if the tree falls on your home, a guest trips on your stairs and intruder makes off with your valuables and much more. You will need an estimate of the replacement cost of your home and its contents. A visual inventory of your valuables insurance rate quotes, insurers’ strength ratings and an annual policy review from a professional appraiser. A floater policy add-ons for flood, earthquake coverage and extended replacement coverage.

Step 1: A standard policy covers property damage caused by certain disasters. Personal belongings up to a limit personal liability which protects family members from lawsuits related to injury or property damage they may cause others and medical coverage which pays the expenses of non-family members injured on your property.

Step 2: Calculate how much insurance you need to carry. Homeowners insurance reimburses you for the cost per square foot of rebuilding your home not the market value of the house.

Step 3: Figure out how much it would take to replace the contents of your home which you can record by photographing or videotaping them. Consider hiring a professional appraiser to help. A standard policy has reimbursement limits. If you own something particularly valuable that exceeds the limit by a separate policy for it. You’ll have to prove its worth with an appraisal

Step 4: Consider buying additional coverage. Damage from fire and lightning is covered in standard policies but flooding and earthquakes are not. Hurricanes are generally covered but any flooding they cause is not. If you live in an area prone to disasters that cause rebuilding costs to skyrocket you might want extended replacement coverage which gives you an additional 20 to 25 percent over your policy limit.

Step 5: Weigh the pros and cons of a cash value policy which gives you money to replace your belongings – depreciation versus a replacement cost policy which reimburses you for the current cost of replacing your goods. The latter has higher premiums.


Wondering what determines the cost of homeowners insurance?

Here are some factors that may affect your homeowner’s insurance premium. First, consider your types of coverage. Certain coverages, such as dwelling, personal property, and liability, are standard parts of a homeowner’s insurance policy. You may decide it makes sense for you to add optional coverages, as well. Each coverage in your policy has its own limit. A limit is the amount of coverage you purchase and the maximum amount your policy will pay for a covered claim.

The limits you select may play a role in the cost of your homeowner’s insurance. Next, think about your deductible. This is the amount you typically have to pay out of pocket toward a covered claim before your insurance coverage kicks in. If you select a lower deductible, you will typically pay less out of pocket toward a covered claim. However, the overall cost of your insurance premium may be higher. On the other hand, if you choose a higher deductible, your out-of-pocket costs will typically be higher – but your premium may be less. Homeowner’s insurance prices can vary because no two policies are alike. Contact a local agent to get a homeowners insurance quote for the coverages that fit your needs.