What You Need to Know When Shopping for Homeowners Insurance

Choosing the right homeowner’s insurance can be overwhelming, but asking the right questions can help you make an informed decision. Here are six important questions to ask when shopping for homeowner’s insurance, ensuring you get the coverage you need without paying for unnecessary extras.

1. How much will it cost to rebuild my home?
   When purchasing a homeowner’s policy, you want to ensure it covers the full cost of rebuilding your home if it were to be completely destroyed. Your insurance agent can provide an estimate based on your home’s size, location, and construction materials. While most disasters like fire, storms, and lightning are covered under standard policies, note that floods and earthquakes require separate insurance.
2. What is the value of my personal property?
   Your policy should also protect your personal belongings, such as furniture, electronics, and clothing, if they’re damaged or destroyed. Typically, insurers offer coverage for personal property worth 50 to 70 percent of the home’s coverage amount. For example, if your home is insured for $100,000, expect personal property coverage between $50,000 and $70,000. To make sure your belongings are properly covered, it’s a good idea to create a home inventory, which can be done easily with tools like Know Your Stuff®.
3. How much liability coverage do I need?
   Liability coverage protects you if you’re held responsible for causing injury or property damage to others, including incidents involving your pets. It also covers the cost of legal defense if you’re sued. While the minimum liability coverage is usually around $100,000, it’s often recommended to have at least $300,000. If you have significant assets, you may want to consider umbrella insurance for additional protection.
4. How much coverage do I need for additional living expenses?
   If your home becomes uninhabitable due to a covered event, additional living expenses (ALE) will help cover costs like hotel stays and meals. Most policies cover about 20 percent of your home’s coverage value for ALE, so if your home is insured for $100,000, you’d typically get $20,000 for living expenses. Some policies limit this coverage to a set time period, such as 12 to 24 months, so check the details with your insurer.
5. Do I need separate flood or earthquake insurance?
   Standard homeowner’s insurance doesn’t typically cover damage from floods or earthquakes, so you may need to purchase separate policies for these risks. Flood insurance is available through the National Flood Insurance Program (NFIP) or some private companies, while earthquake coverage can be added through a supplemental policy or state programs, like California’s Earthquake Authority. It’s important to discuss these options with your insurance agent to ensure your property is fully protected.
6. Am I eligible for any discounts?
   Many insurers offer discounts for safety features like smoke detectors, security systems, and deadbolt locks. If you’ve recently upgraded your home with modern plumbing or electrical systems, you could also qualify for a discount. Additionally, seniors and retirees may receive up to a 10 percent discount at some companies. Be sure to ask your agent about any potential savings opportunities.

In conclusion, when shopping for homeowners insurance, it’s essential to ask these questions to ensure you get the coverage that fits your needs. While insurance agents earn commissions based on your premium, it’s important to find the right balance between sufficient coverage and avoiding unnecessary costs. By staying informed, you can secure the best deal and protect your home and belongings effectively.