Buying a homeowners insurance policy is serious business. While you can always make changes to your policy or switch companies, you don’t want to endanger your home for any length of time with an inferior policy. Information is the key to getting the right policy, so here are 3 things to know before you buy homeowners insurance.
1. How Much Insurance you Need
Knowing how much homeowners insurance to buy is one of the first items you should consider. There are many homeowners insurance estimators or calculators online to help you make this determination. To help determine how much homeowners insurance coverage need, you will need to know the value of your home. This is the value of the home only and not the lot that it sits on, nor the contents inside.
You also need to think about replacement value. If your home is worth $150,000 at the time of purchase, how much will it cost to rebuild 10 years into the future? It is recommended that you purchase at least 125 percent replacement coverage, though you can easily go as high as 200 percent. It is important to evaluate how much the contents of your home are worth as well as any other structures on your property. It is important to make an inventory of all valuable items in your home so they can be properly covered.
2. Extent of the Coverage
This may seem like common sense but it is easy to overlook the basics sometimes. Items slip through the cracks when purchasing a homeowners insurance policy especially if you are also in the process of buying a home. All the paperwork, deadlines and other issues can overwhelm you. Know before you buy homeowners insurance the following elements of your policy.
- Contents of home
- Structure of home
- Other structures
- Liability coverage
In addition to these general coverage items, also make sure of the exact perils that are covered. Perils are anything that can damage your home, such as fire, wind, and explosion.
Once you see that you have protection for these standard items, start looking into coverage items such as flooding, earthquake and hurricane protection. These are not standard coverage items and in some areas are required policies that must be purchased separately. Finally, make sure that the limits of coverage are adequate for your home and location so there will be no gaps if you do need to file a claim.
3. How to Shop
Knowing how to shop for homeowners insurance is critical to getting the best deal possible. This means saving money with online rate quotes, but also getting the policy your home requires from a reputable homeowners insurance company. This is doesn’t entail as much leg work as if may appear. You have already done much of the work by determining the type and amount of coverage you need. The next step is to narrow down the many choices of homeowners insurance companies. Focus on their policy options, financial outlook and company history. This means researching companies to see their past customer service records as well as their future financial stability ratings.
Once you have narrowed down your choices to around five or so companies, you can then start getting rate quotes to see which the best value is. Cheaper may not always be better, but you certainly want to stay with a company that is at least cost competitive. Getting these quotes is easily and quickly done online. In fact, you can even purchase your homeowners insurance online if you wish.
Summary of What to Know Before You Buy Homeowners Insurance
The best advice is to be thorough and not let any questions go unanswered. There is a great deal of money on the line if there is a major accident or disaster to your home. It is important to get things straight from the beginning. This is done by researching the topic and then shopping for homeowners insurance to get the best deal possible. Best deal doesn’t mean the cheapest policy you can find, it means the protection you need for the best price available. This is most easily done by looking for homeowners insurance online. The 3 things to know before you buy homeowners insurance above will get you started shopping for the right policy.