Six Essential Questions to Ask About Your Homeowner’s Insurance

When it comes to homeowner’s insurance, it’s crucial to understand what’s covered and how well your policy protects you. Before purchasing or renewing your policy, there are some key questions you should always ask to ensure that you’re getting the best coverage for your needs. Let’s dive into six essential questions that every homeowner should consider.

1. What’s the cost to rebuild my home if it’s totally destroyed?
   Your homeowner’s insurance should fully cover the cost of rebuilding your home if it’s destroyed. An insurance agent can help calculate this amount based on your home’s location, construction materials, and the local building costs. Keep in mind, though, that certain disasters, like floods and earthquakes, are typically not covered under standard policies, so you may need separate coverage for those.
2. How much is my personal property worth in case of a total loss?
   If your home’s contents are damaged or stolen, your homeowner’s policy should cover the replacement of personal property like furniture, electronics, and clothing. The coverage usually amounts to 50 to 70 percent of your home’s value, so if your house is insured for $100,000, expect personal property coverage between $50,000 and $70,000. To ensure you’re adequately covered, consider conducting a home inventory. You can even use free online tools like Know Your Stuff® to keep track of your belongings securely.
3. How much liability protection do I need?
   Liability coverage is essential in case you’re held responsible for someone else’s injury or property damage, either in your home or elsewhere. The coverage also extends to your pets. A standard policy often starts at $100,000, but many experts recommend increasing that to $300,000 or more, especially if you have substantial assets. If you need more protection, ask your agent about umbrella insurance, which provides extra liability coverage.
4. What should my additional living expenses coverage be?
   If your home becomes uninhabitable due to a covered disaster, additional living expenses (ALE) coverage will pay for temporary accommodations and extra living costs. ALE coverage varies by insurer, but many policies offer about 20 percent of your dwelling’s coverage. For example, if your home is insured for $100,000, you would have $20,000 in ALE coverage. Some policies also limit how long this coverage lasts, typically 12 to 24 months.
5. Do I need separate flood or earthquake insurance?
   Many homeowners are surprised to learn that flood and earthquake damage isn’t included in standard insurance policies. Given the frequency of such natural disasters, it’s worth considering specialized coverage. Flood insurance is available through the federal government’s National Flood Insurance Program (NFIP) or private insurers. Earthquake coverage can typically be added through supplemental policies or state-run programs like California’s Earthquake Authority.
6. Am I eligible for any discounts?
   Insurance companies often offer discounts for homeowners who take extra precautions to protect their property. Features like smoke detectors, burglar alarms, deadbolt locks, and sprinkler systems can lead to lower premiums. You may also qualify for discounts based on your age, retirement status, or recent home improvements. It’s always a good idea to ask your agent about any available discounts.

In conclusion, while insurance agents are paid on commission, it’s important to work with them to ensure you’re not overpaying for coverage. By asking these questions, you’ll not only protect your home more effectively but also potentially save on your premiums by taking advantage of discounts and adjusting your coverage to better suit your needs.