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Homeowners insurance buyers' guide
A home is the most significant financial investment many people make. It can take years of dedicated saving and patience to find and purchase the home of your dreams. As such, insuring your home is a vital part of the home purchasing process.
In this article, we will outline the steps you should take when insuring your home, as well as homeowners insurance buying tips to consider.
How to get homeowners insurance: tips and advice
Below is specific information to reference when comparing home insurance options.
1. Know the specifics of your home
You'll need to know the following details about your home in order to get homeowners insurance:
- The replacement cost of your home
- Your dwelling style (how many stories tall the structure is)
- The year in which your home was built
- Date of last property claim
- Square footage
- Garage size
- Siding/exterior wall type
- Roof age and type
- Fire safety information
Many major companies use your address to auto-populate your home’s information, but you should double-check this info is correct. It can impact your home insurance premiums and hinder your ability to file claims down the road.
2. Know what is — and is not — covered by your policy
Know the major perils excluded from homeowners insurance policies:
- Damage to vacant dwellings
- Wear and tear
- Damage caused by major weather conditions
- Government actions/war
- Intentional damage
You may be able to purchase an endorsement to add coverage, but a basic homeowners insurance policy will not cover these circumstances.
3. Know how much coverage you need
Know how much coverage you need for your dwelling, personal property, liability, and any other circumstances. Once you need to file a claim, it's too late to add an endorsement or bump up your coverage levels.
4. Consider bundling and non-bundling options
If you have another insurance policy, consider bundling it with your home insurance. Most companies will give you a bundling discount for combining home and auto insurance. Bear in mind, every company’s insurance products are not ranked equally in terms of service and coverage options.
5. Weigh your options
It can be tedious, but comparing homeowners insurance policies is the best way to save and to find the best homeowners coverage. Unlike your auto insurance, it’s harder to lower your home insurance costs without drastically changing your coverage.
The best way to save on homeowners is to switch companies. If you’re interested in speaking with a homeowners insurance expert, call us at 855-493-9728 or click below.
Compare rates today and save!
Unlike auto insurance, there is more variability between home insurance policies and companies. While you can find an in-depth outline of what is covered by a homeowners policy here, the primary components of a policy are listed below.
In any homeowners policy, your dwelling coverage is the physical structure: walls, roof, and other structural components. Dwelling coverage comes standard and every home is insured at its replacement cost value. If your home were to burn down, your replacement cost coverage would reimburse you for how much it would cost to rebuild it to its original state (up your coverage limit).
You do not need to determine the replacement cost yourself but you should have an idea of your home's value to avoid being lowballed.
Take the following steps to estimate the cost of home repairs:
- Research labor costs: A general formula for this is to multiply the average rate for builders (by square footage) by your square footage.
- Consider upgrades you've made to your home: Newer floors, roofing, cabinets, fixtures, and appliances may cost more to replace or repair.
- Include your home’s exterior finish: Calculate the value of your home’s exterior, including siding, windows, and window treatments.
It’s crucial to know the difference between the replacement cost of your dwelling and its market value. No insurance company will insure your home at its market value — that’s simply not the way insurance works. Market value includes the cost of your land, your neighborhood's cost of living, and other factors unrelated to rebuild costs.
If your mortgage lender and homeowners insurance disagree on the value of your replacement cost, you will need to moderate to reach an amicable agreement. Most insurance companies won’t insure your home for much more than its replacement cost value: their main responsibility is to return your home to its pre-damaged condition. In this situation, talk to representatives from your insurance company and mortgage lender — simultaneously, if possible.
Below is more information to consider when you’re further along in your dwelling coverage considerations:
Personal property coverage
There's usually some flexibility on the amount of personal property coverage you can carry on your homeowners policy. A basic policy might give you 50% to 70% of your dwelling coverage for your personal property. If you have $200,000 in dwelling coverage, you would have $100,000 to $140,000 in personal property coverage. This can vary.
Something to keep in mind when you’re shopping for homeowners insurance with your personal belongings is whether you have any particularly valuable items for which you need additional coverage. Most homeowners policies restrict coverage on certain valuable items. Jewelry, fine art, guns, cash, and collectors are all subject to lowered coverage limits. Below are items often subject to insurance coverage:
Money, gold, coins
Jewelry, watches, furs
In addition to selecting how much coverage you need, you will also have to select your deductible. With a higher deductible, you’ll have a lower premium but the more you would have to pay after a claim. Average deductibles range from $250 to $1,000.
If you own anything of considerable value, you should add additional coverage. Learn more about homeowners insurance endorsements.
Additional structures include detached sheds, driveways, fences, swimming pools, or gazebos. Insurance for non-dwelling structures is typically 10% of the dwelling coverage amount. If, for example, your dwelling insurance totals $200,000, you would have $20,000 in coverage for other structures. Consider the physical value of any detached structures and set your insurance levels accordingly.
Additional living expenses
This covers your additional housing fees if you’re forced out of your home due to a covered loss. This coverage is typically a percentage of your dwelling coverage.
Liability coverage is an important piece of any homeowners or renters insurance policy. For a homeowners policy, your liability is split into two parts: your personal liability and your medical payments to others.
Personal liability covers you if you’re held legally responsible for damage to bodily injury or property except when you’re driving (your auto insurance covers you at that point). It's a good idea to keep your personal liability level as high as you can afford — above the value of your home and your income.
Below are additional coverage options you should think about when you’re shopping for home insurance. A more in-depth list can be found here.
If you live in a flood zone or an area known for flooding, consider this coverage. Your landlord will more than likely require you to carry this coverage. Learn more about flood insurance or get a quote online from Neptune Flood Insurance.
Depending on your insurance company and your location, you might be able to add this coverage to your existing policy or purchase an earthquake policy separately. Without it, a standard homeowners insurance policy would offer you no earthquake coverage.
Personal property endorsement
Purchase this coverage if you have personal items of particular value. Consider including in this coverage any fine art, watches, jewelry, guns, or collectible items.
Sewage and water backup insurance
If your sewage backs up, most homeowners policies will not cover any damage to your home or property. Depending on the extent of the damage, this could set you back thousands of dollars. For more information, see here.
Windstorm insurance coverage
Depending on your location, coverage for wind damage will be a policy add-on. If damaging winds are common in your area, you may need additional wind insurance coverage for your home.
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- Actual Cash Value vs. Replacement Cost
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
- The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
- The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.