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Home Insurance Tips and Advice - How to Choose Home Insurance Bookmark this page Home Insurance Tips and Advice Center Topic: How to Choose Home Insurance See the subtopics menu for advice on how to choose the right homeowners insurance plan for you and your family. For additional information about home insurance, see the topic list directly below. Homeowners Insurance Topics · Home Insurance Explained · Choosing Home Insurance · Home Insurance Terminology How to Choose Home Insurance - Subtopics · Homeowners Insurance Coverage Options · Homeowners Insurance Costs · Comparing Homeowners Insurance · Working with an Insurance Professional · Reviewing an Existing Policy · Saving Money on Homeowners Insurance · Homeowners Insurance Coverage Homeowners Insurance Coverage Options What does homeowners insurance cover? There are a few basic homeowners insurance coverage options that most homeowners will need, and a few other specialized options that only some homeowners will need. Basic homeowners insurance policies provide protection for property and possessions against a standard set of events or disasters, including things like fire; hail; riots or civil commotion; damages caused by aircraft or vehicles; theft; volcanic eruption; falling objects; or weight of ice, sleet, or snow. If one of these or another covered event occurs, homeowners insurance will provide pay the homeowner for losses. The property insurance component pays to repair or rebuild a damaged home; to repair or replace damaged or lost personal possessions, whether they were in the home or were damaged by one of these events anywhere in the world; and for living expenses if the home is unlivable because of one of these events. Basic homeowners insurance may not cover the full cost of some expensive items inside a home, like jewelry, fine art, furs, or other precious items, and homeowners can buy special insurance coverage for those items. The liability insurance component protects homeowners against lawsuits that can result from injuries or property damage caused to others by the homeowners, or their pets or children; and pays for the cost of defending a homeowner in court and any awards paid to the other party. It also pays for medical expenses if someone is injured in the homeowner's home, which is a way to avoid having a liability lawsuit filed against the homeowner. For each of these types of homeowners insurance coverage — property, possessions, liability, living expenses — damage caused by events such as war, nuclear accidents, floods, and earthquakes are specifically excluded. ^ Back to top Homeowners Insurance Costs What affects the costs of homeowners insurance? Homeowners insurance is a critical piece of a homeowners financial planning, and affordable options are available. One of the most important factors in the cost of homeowners insurance is the size of the home. This is followed closely by area the home is located in, the risks it is prone to — such as severe weather, earthquakes, or crime; and local building costs. The overall economy also impacts the price an insurer can get for a product — if the economy is doing well, insurance policies are likely to be more expensive, because homeowners can afford it. Homeowners can control some costs, though. A higher deductible can result in a lower monthly premium, but it's important to find the balance between a reasonable deductible and a reasonable monthly premium. Purchasing homeowners insurance as part of a bundle of other insurance coverage is another way to reduce costs. Loss prevention activities — such as installing smoke detectors or fire resistant roofing material — may reduce the risk of certain types of losses and home insurance providers reward homeowners for this with lower costs. Finding the right insurance coverage at the right cost is a complex matter. It takes a bit of research to understand the general risks and costs. Working with an insurance professional is the best step to take to ensure that a homeowner purchases the correct type and amount of insurance, at the best cost. ^ Back to top Comparing Homeowners Insurance What is the best way to find homeowners insurance providers? The best way to find a homeowners insurance provider is to work with someone that a friend or family member uses. Another way is to compare home insurance providers online. No matter how an insurance professional or insurance company is recommended, the best way to compare home insurance providers is to ask a lot of questions about the policy, the types of coverage available, the insurance professional, and what type of support is offered. What risks are covered in a standard policy? What risks require additional coverage? Is it possible to get a discount with a bundle of other insurance, like automobile? What are the premiums and deductibles? Can the homeowner afford a higher deductible in exchange for a lower premium? Can the premium be reduced with certain loss prevention or safety activities? Is the insurance agent captive or independent, and which is best for the homeowners needs? Does the insurance professional have experience in the state or area the home is located in? Is the insurance professional licensed? What type of customer service does the insurance professional offer? What support do they offer in the event the homeowner needs to make a claim? ^ Back to top Working with an Insurance Professional What is the best way to find homeowners insurance specialist? Working with an insurance professional is the best way to find the right home insurance providers, at the right price. An insurance agent is a professional who works either independently or for an insurance company, and is usually the best option for homeowners, as they understand the insurance business, as well as any special needs in the area the home is located in. When looking for an agent, it is important to find someone who understands the homeowner's needs, can answer questions, provides some options, and will be available in the event of a claim. It is also important to feel comfortable with and trust the insurance professional, as homeowners may be working with them at a very difficult time. There are two types of insurance agents: Captive agents, who represent one insurance company and will have a deep understanding of that company's offerings. Independent agents, who represent multiple insurance companies, and can offer choices among several insurance companies' policies. Insurance agents must be licensed by the state they work in, indicating a minimum level of good conduct and knowledge of insurance issues in that state. Before working with an insurance professional, it's a good idea for homeowners to research an agent's record and license status. ^ Back to top Reviewing an Existing Homeowners Insurance Policy Should existing homeowners insurance coverage be reviewed? Choosing homeowners insurance can feel like a daunting task. But once the homeowner is insured, the policy still needs to be reviewed, in order to make sure it provides enough protection for the current value of the home and possessions, and still addresses the risks that homeowner faces. The best time to review homeowners insurance is when the insurance company sends the renewal notice. In that letter, the company will explain any changes to the policy or coverage, and it's important to ensure the policy still meet the homeowner's needs. At that time, the homeowner should also review the deductible — if the financial situation has changed, this is a good time to think about getting a higher or lower deductible to help with the premium payments. Additionally, if there are significant new personal possessions—such as computer equipment or fine art—the coverage may need some adjustment. Another good time to review the insurance policy is after any major life change, such as: 1) A renovation or an addition that adds square footage to the home, even for structures like a garage or shed that aren't connected to the home. 2) The purchase of a piece of jewelry or other expensive item. 3) Improvements that make the home safer, such as a new fire retardant roof or new burglar alarm system. 4) A major lifestyle change such as a divorce or marriage, as this changes the amount and type of belongings in the home. 5) Starting a home-based business, which may require additional coverage for equipment or inventory. ^ Back to top Saving Money on Homeowners Insurance Is it possible to save money purchasing homeowners insurance? Insurance is a necessary expense, but saving money on homeowners insurance is possible. The first step to a home insurance comparison to receive quotes from multiple sources and review the coverage options offered by each. Considering the deductible is one way to reduce costs of homeowners insurance. A higher deductible — the amount a homeowner pays out of pocket before the insurer pays for a claim — can lower the monthly premium. Even increasing it by only a few hundred dollars can make a big difference. It's important, however, for a homeowner to find a reasonable balance between the amount of deductible and the monthly premiums. Loss prevention activities, like smoke detectors or burglar alarms may, are another way to save money on an insurance policy. Insurers reward homeowners who take steps to minimize the need to make a claim. Although an actual cash value policy — which repays a homeowner for the price originally paid for an item — is cheaper than a replacement cost policy — which pays to replace the items at today's cost, no matter the original price — homeowners need to ensure they have enough insurance to replace a home and its contents. Working with an insurance agent is really the best option for deciding which homeowners insurance is right for you and your home. These professionals understand insurance, disaster planning, steps to take to protect a home, and which insurance companies have the best offers. ^ Back to top What Does Homeowners Insurance Cover? What does homeowners insurance cover? Homeowners insurance provides homeowners with financial protection against the loss of a home or possessions, and lawsuits against the homeowner. Homeowners insurance provides four basic types of coverage: 1) The actual building — This insurance will pay to repair or rebuild the home if it's damaged by a disaster covered in the policy, such as falling objects, a fire, or civil commotion. 2) Personal belongings — This insurance will pay for items lost as a result of a covered disaster, like a windstorms or explosions, as well as for theft. Off-premises coverage, which is included with most homeowners insurance policies, means that homeowners' belongings are covered for these risks anywhere in the world. Expensive items like fur or jewelry may require additional insurance to cover their full value. 3) Liability — This insurance will cover injuries or property damage homeowners, or their children or pets, cause other people, anywhere in the world, and includes court costs and damages. 4) Temporary living expenses — This insurance pays for costs of living away from home, for things like staying in a hotel or dining in restaurants, if the home is temporarily unlivable because of an insured disaster. Damages aren't covered if they're caused by events not included in the insurance policy. Typical insurance policies don't cover damages caused by earthquakes, floods, war, or nuclear accidents. ^ Back to top Mortgage Refinance Calculator Should you refinance your existing mortgage? This calculator can help you that find out. Enter the specifics about your current mortgage, along with your current appraised value, new loan term, new rate and closing costs. Together, this can determine how much refinancing might save you overall. · Calculate how much you could save in interest Note: This information is for general use only. Use this information as part of a full research process. General advice does not always apply directly to individual matters. Please consult a local expert with specific and complex questions about your individual situation. Recommend this page to a friend  ^ Back to top

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