Buying Home Insurance

Buying Home Insurance: A Guide to Getting the Right Policy for Your Needs

Your home is your most valuable investment. Buying a home is one of the biggest and most important financial transactions you’ll make it your lifetime. Not only that, but your home is where you raise your family, it is your sanctuary from the rest of the world, and it’s something that you can pass on to your children after you are gone. It’s only reasonable that you would want to do everything that you can to protect your home and everything in it.

That’s why buying home insurance can get so complicated. You want to make sure that your policy covers everything that needs to be covered. But how can you be sure that you are getting the right policy for your needs?

Buying Home InsuranceCovering the structure of your home

When it comes to buying home insurance to cover the structure of your home in case of total loss you have two basic options: 1) cash value coverage or 2) replacement cost coverage. Cash value coverage is traditionally the less expensive of the two options. Buying home insurance coverage of this type means you’ll be paid cash for the total worth of the property (including any depreciation in value) at the time that it is destroyed.

Replacement coverage will pay the total that it will cost to rebuild "replace" your home with the same quality of materials it was made from. If replacement coverage is offered where you live and you can afford it, it is the best option when buying home insurance.

Getting home insurance riders

Most home insurance policies do not offer adequate coverage for homeowners who a) have very valuable personal possessions such as jewelry or fine art, b) have to do updates for building code and zoning changes, and c) want complete coverage for various natural disasters.

If you own a significant amount of fine art, antiques, and the like, live in a historic area or other area susceptible to rezoning and code updates, or want flood, hurricane AND fire insurance, you’ll need to purchase separate coverage (riders) on top of your standard home insurance policies.

Liability protection

Traditionally when buying home insurance, owners tend to think less about getting liability protection. Liability protection covers you in the event that someone sustains injury on your property. Most home insurance policies offer between one hundred and three hundred thousand dollars worth of liability protection. This is enough IF your total assets equal less than these amounts.

Essentially when buying home insurance to protect yourself from liabilities, the more that you are worth the more coverage you’ll need to protect yourself. If your total assets add up to more than what is covered by your current home owner’s insurance policy, then you need to update your coverage so that it will protect you from losing what you own above the covered amount.

Shop around before buying home insurance

Although you don’t want to be a cheapskate when buying home insurance, it does pay to look around for a good deal. You may be able to get discounts when buying home insurance if you are a senior citizen, a non-smoker, if you buy insurance from the same company you have your mortgage with, or if you’re in a certain occupation (such as teaching). Also, remember to periodically check your home insurance policy to see if it is still congruent with your particular needs. Update when necessary and remember that buying home insurance is a fantastic way to protect your and your family’s future.