Put together a question checklist
In many ways, buying homeowners insurance is like dining at a fine restaurant where everything is a la carte. You'll have a primary dining choice (fire, lightning, wind, explosion coverage, etc.) that will be your main course.
You may still want potatoes, rice, veggies, etc. to accompany your major choice for dinner. In addition, you might want an appetizer, soup, and/or dessert to complete your dining experience.
Home insurance is similar. A basic homeowners insurance policy covers many of the typical, classic hazards that may befall your home and outbuildings (sheds, cabanas, garage, dog house, etc.).
But, there are many other hazards to consider and a wide universe of personal property and other coverages you might want.
Your insurance agent and/or company can help you, but they cannot think for you nor can they know about all of your "stuff" that you might want to cover. In addition to your furniture, clothing, electronics, and appliances, you might have valuable rugs, antiques, art work, jewelry, collectibles, or special family items that you want to safeguard.
Giving some serious thought to what you'd like to cover and what dollar value you can fairly place on your personal property will help you select the proper home insurance policy for you.
Your ability to customize your home insurance coverage also places the responsibility to select the best mix of protection squarely on your shoulders. Knowing the right questions to ask should get you the coverage you want at a price you can afford.
Questions to ask when considering home insurance coverage
How much coverage do I need?
You'll need a minimum of an amount equal to or greater than your mortgage loan balance. But, you really need enough to replace your home if it were totally destroyed.
What is covered by a basic homeowners policy?
Compare and contrast the differences between "basic" coverage given by different insurance companies. Does one company offer more "basic" coverage than another?
Is my location considered a "high risk" area for losses?
If your company has classified your neighborhood or area as high risk because of loss statistics, your premium will probably be higher than standard rates.
Is disaster coverage (flood, hurricane, tornado, etc.) needed in my area?
For many years, wind and wind driven rain losses were covered as part of your homeowners or landlord insurance. However, just as flood losses are now covered by Federal Flood Insurance, the massive losses experienced by many companies from hurricanes and tornadoes, are being excluded by most home insurance policies.
If your home is in an area susceptible to hurricane or tornado visits, you'll often need a separate endorsement or rider to have protection.
Does my policy include loss of use coverage?
Should your home suffer loss from fire, smoke, etc. that renders it unlivable for a period until repairs are completed, where are you going to live? If you need to become a hotel guest for a week or two, and you have loss of use coverage, your insurance company will pay or, at least, reimburse you, for your living expenses.
When does loss of use protection apply?
If I have loss of use protection, when does it apply, what is covered, and for how long a period will I be reimbursed for other living expenses? Hopefully, your coverage will apply for the entire time you're waiting for home repairs.
Does my policy offer replacement value or actual cash value?
Does my homeowners policy offer replacement value or ACV (actual cash value) coverage for all my personal property? Setting values for personal property can be challenging. Replacement value or ACV protection ensures you'll receive fair payment.
What level of liability insurance is included?
What type and level of liability insurance is included and what is excluded from coverage? Knowing your exclusions can be as important as knowing what is covered by your policy.
How does the claim procedure work?
If I have a loss, how does the claim procedure work and how soon after filing can I expect reimbursement? Just as you should know what information to get and how to file a claim after an auto accident, you should ask how homeowners insurance claims are filed to eliminate any delay in receiving your insurance proceeds.
While you can easily get a loaner auto when your auto is out of service, it's much more complicated and critical if you need your home repaired before you can return to living in it.
Do I need an umbrella policy?
In addition to my liability limits, do I also need an umbrella policy and what will it cost? An umbrella policy covers you for losses that may exceed your stated liability maximums in your home insurance policy.
Umbrella insurance rates are very reasonable and you can purchase a million dollars of extra, back up coverage for very attractive prices to protect against a catastrophic liability loss.
The more questions, the better
Your checklist may have more questions, but you should include at least these noted above to get the coverage you want and receive your proceeds when you need them.
