How To Select The Right Homeowners Policy

Know The Value Of What You’re Insuring. Before you shop for insurance, have a good idea of how much your home and possessions are worth. According to a study conducted by Marshall & Swift/Boeckh, as many as 75% of U.S. homeowners have insurance policies that wouldn’t cover the cost of rebuilding if a fire or storm leveled their home. There are a number of ways to determine what it would cost to rebuild your home. (See "How Much Insurance Do You Need" for more details.)

Compare, Compare, Compare. While the types of homeowners policies are fairly standard throughout the country, individual policies can differ from company to company as well as from state to state. Service and financial stability can also vary dramatically from one company to another. These are extremely important considerations – especially when you have a claim. Remember your homeowners policy is only as good as the people behind it. So be sure to check out the reputation of the insurers you’re considering.

Understand What You’re Buying. Before you decide on a particular policy, know exactly what it will give you. Standard policies provide coverage for things like lightning, hail, explosions and theft. They don’t cover floods or earthquake. For these, you need separate policies. (Studies show that only 20% of homeowners in flood prone areas have flood insurance – even though the risk of flood is 26X the risk of fire.) Look for a policy that insures your home on a replacement cost basis and gives you the option to insure your belongings the same way.

Make Sure You Get All The Discounts You’re Entitled To. Depending on the insurance company, there are a wide range of discounts you may qualify for. There are discounts for newer homes, homes equipped with hurricane shutters and fire and burglar alarms as well as homes built to new Florida Building Code standards – just to name a few.

Ask Questions. The best way to make sure you’re getting the right homeowners insurance for your situation is to ask questions. So make sure you’re comfortable with the agent and/or insurer you’re considering.