How to Select the Best Homeowners Insurance Coverage

How to Select the Best Homeowners Insurance Coverage

Buying a home is an exciting, new adventure. One of the many decisions you will make is how to insure your new home. The Insurance Information Institute reports that one in 20 insured homes has a claim each year. While you never want to file a claim, having the right coverage is critical to your new investment. Here’s how you can make sure you’re choosing the best homeowners insurance coverage for your home.

  1. Understand What Homeowners Insurance Provides 

Homeowners insurance is an agreement to repair or replace your home and put your life back to where it was after a disaster/covered loss in return for a premium/payment.

Most standard homeowners insurance policies cover:

  • The cost to rebuild your home after a disaster 
  • Your contents inside the home in the event of a covered loss
  • Liability coverage to pay medical bills if somebody is injured on your property
  • Living expenses if you have to leave your home after a disaster
  1. Explore Your Options

One of the important choices you will make when selecting a policy is your limit of insurance, which is the maximum your insurance company will pay you in the event of a covered loss.

New homeowners will often consider their home’s resale value when deciding their limits of insurance. However, you are not insuring your home’s resale value.

You want your insurance limit to cover the cost to completely rebuild your home after a covered loss.

Beyond choosing your limits, you will also have optional coverages you can add on to your policy. These may include:

  • Guaranteed Home Replacement Cost: Provides full replacement of your home in the event that your coverage limit is too low. This may occur due to unforeseen changes in construction material and labor costs.
  • Personal Property Replacement Cost: Pays you the cost to purchase new contents regardless of the resale value or age in the event of a covered loss. Alternatively, standard coverage will pay you the cash value of your contents at their depreciated value. 
  • Equipment Breakdown Coverage: Covers the breakdown of all your important home systems and personal major appliances. For example, air-conditioning systems, furnaces, compressors, laptops, televisions, home appliances, and hot-water heaters
  1. Choose the Right Insurance Company

Your next step is choosing the right insurance company. We recommend starting with a local, independent insurance agent. When you search for the cheapest insurance option online, you are most likely missing important details and coverages. A low price doesn’t necessarily mean appropriate coverage. 

An agent will help you dig deeper and find out exactly what is and isn’t covered under each policy you consider. They can provide you with personalized quotes from any of them based on your needs. Also, their success is dependent on representing quality insurance companies. So, they are very familiar with insurance companies known for superior customer service.

  1. Bundle Your Insurance Policies for Extra Savings

Oftentimes, insurance companies offer multiple-policy discounts since they sell multiple types of insurance. If you buy more than one policy from the same insurance company you may qualify for policy discounts.

  1. Remember to Look Ahead

Lastly, remember your home insurance needs may change over time. Your insurance agent is a great resource during changes to your home. Tell your agent if any of these changes in your family or home occur to ensure you still have the coverages you need: 

  • Remodeling or renovating parts of your home
  • Changes to who is living in the home 
  • Changes to how much time you spend in the home throughout the year
  • Upgrading the contents of your home
  • Adding a deck 
  • Digging a pool 
  • Finishing your basement

Another aspect of your home that may change over time is the contents inside. It’s a good idea to keep an up-to-date home inventory to document the items in your home. Several free apps can help you capture the information quickly.

Choosing the Best Homeowners Insurance for Your Home Doesn’t Have to be Hard

Purchasing your first house and homeowners insurance is not something to rush through. The advice of your local, independent agent is a great way to ensure your home is covered properly.

Read the original post from our provider, Auto-Owners Insurance.