Your home is probably your most valuable asset, so protecting it makes sense. As such, you can think of homeowners insurance as an investment to protect your financial future. Before you buy a policy based solely on premiums, ask your insurance provider these five questions to make sure you’re getting the coverage you need.
#1 – What does (and does not cover) the policy cover?
The most important part of your home insurance is the policy itself. What, exactly, will it cover? What happens if your lawn mower is stolen from your garage? Will you get full purchase value, or will you get depreciated value? If you accidentally cause an injury to someone outside your home, will your policy cover it? Finding out exactly what your policy covers will help you decide how much and what type of insurance to buy.
#2 – How much coverage do I need?
An insurance agent will often ask you to provide a list of all your possessions. This is called a home inventory, and it can be a big help in the event of a disaster, fire, or even theft. The best rule of thumb is to evaluate all of your possessions and then purchase an insurance policy with coverage that exceeds this amount. It will also help you decide if you need to purchase riders, which are additions to your policy that protect out-of-the-ordinary items, such as very expensive jewelry or expensive paintings.
#3 – How much will it cost to rebuild my house?
Part of your insurance policy will focus on your current home or any damage to the structure of your home. Keep in mind that because real estate values often appreciate, and often significantly, you’ll want to make sure you buy a policy that covers the cost of rebuilding your home, not one that just covers the purchase price.
#4 – What types of claims have been made on my home in the past?
Knowing and understanding what types of claims have been made on your home in the past can help you decide what type of coverage you need now. For example, if your home is in a floodplain and has been subject to flooding once or twice in the past, you’ll want to purchase separate flood insurance. Likewise, if severe storms have been problematic in the past, they are likely to be problematic in the future as well.
#5 – What happens when something happens?
Finally, it’s important to find out what to expect when it’s time to file a claim. Will you be able to speak directly to your local agent? Will they come and assess the damage right away, or will you have to wait a few days? Will the company put your family up in a hotel until repairs can be made? Understanding things like this will not only help you make a better decision regarding your policy, but also give you peace of mind.
When you have the answers to all of these questions, you will have the information you need to make an informed decision. Make sure you understand what is and is not covered, how the insurance company values your home, and how your insurance company will treat you when you need to file a claim.
