5 Questions to Ask When Shopping for Homeowner’s Insurance

Categories: Resources & Tips

When shopping for homeowner’s insurance for your new house, it’s easy to jump and take the lowest rate offered to you by a company without reading the fine print of the policy. Indeed, not all homeowner’s insurance policies are created equally, and countless homeowners find themselves without adequate insurance protection every year when disasters or accidents occur because they failed to obtain the right amount of coverage. Before selecting an insurance provider and purchasing a policy, always ask these five questions to ensure you truly know what you’re buying – and that you’re purchasing the correct level of coverage for your home.

Homeowner's Insurance Information

Before you run out and purchase a homeowner’s insurance policy, be sure to read over these helpful tips.

#1 How much is the personal property in my home worth if a total loss occurs? – Your homeowner’s insurance should cover your entire home, not just the walls, foundation and roof. This includes everything you’ve filled your house with to turn it into a home, such as your furniture, appliances, clothing and keepsakes. In the event that your house is burglarized or a natural disaster occurs, such as a fire, your policy should cover the cost to replace everything that is destroyed. Typically, companies provide personal property coverage equal to 50% to 70% of the amount of insurance you have on your home’s structure. Conduct a total home inventory before determining how much personal property insurance you need, and make sure you go with a company that offers enough protection to cover it.

#2 Do I need a separate flood and/or earthquake insurance policy? – Most new homeowner’s don’t realize that certain natural disasters aren’t covered by typical insurance polices, and a separate policy is usually needed to cover repairs if such a disaster occurs. Most commonly, damage sustained from floods and earthquakes is not covered. Always ask companies if you’ll need to purchase two policies to receive full coverage, and don’t simply assume that your home will be protected until it’s too late.

#3 How much liability protection do I need? – Liability protection is a portion of your policy that covers you against lawsuits for bodily injury or property damage caused by you, your family members or pets toward other people. This portion of your policy is meant to pay for both the cost of defending you in court and any money the court awards the person suing you – up to the limit of the policy, of course. Interestingly enough, this portion of your policy doesn’t just cover you at home, it covers you anywhere in the world. Limits usually start at $100,000, but many companies will recommend that you buy at least $300,000 in liability protection. Ask companies how much they recommend based on the amount of assets you possess.

#4 How much additional living expense coverage do I get? – Standard homeowner’s insurance policies include an additional living expenses provision that pays for the costs of living outside of your home if your can’t reside there temporarily due to damage from an insured disaster, such as a fire. It covers hotel or motel bills and any other expenses over and above your typical living expenses. The amount of coverage varies from one company to another, but is usually equivalent to 20% of your house protection. Always confirm with a company how much additional living expense coverage is included before committing to a policy.

#5 Do I qualify for any discounts? – It’s surprising how many new homeowners neglect to ask insurance companies if they qualify for any discounts before agreeing to a policy. Companies are unlikely to offer you discounts upfront if you fail to ask for them, because they want to make money just as badly as you want to save it. You might be surprised just how many discounts you qualify for on your premium. For example, most companies offer a discount to homeowners who have smoke detectors, security alarms or deadbolts installed in their homes to increase their home security. Additional discounts of up to 10% are available for homeowners over 55 years of age. Since LGI Homes are all newly constructed and feature top-of-the-line systems, you could score a discount just for having updated, modern plumbing and electrical wiring in your house.

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