The 8 Most Important Questions to Ask When Shopping for Home Insurance

Homeowners may be required by a bank or mortgage lender to purchase a minimum amount of  basic homeowners insurance. Here are seven key questions to ask a broker or insurance agent when shopping for a home insurance policy:

  • What’s typically covered by a home insurance policy?

Most homeowners insurance covers certain basics, but policies can vary a lot, so be sure to read the fine print before you choose a policy. A standard insurance policy will cover your actual, physical dwelling, as well as some other structures on the property, like a garage, fence, driveway, or shed. Your personal property is typically covered in your policy as well, and details about the specific protection is sometimes called contents insurance. Be sure to ask about coverage for fire (which is the number one cause of home damage and home insurance claims), natural disasters (including earthquakes), floods (which are typically not covered in a standard home insurance policy), vandalism, personal injury, and specific valuables like art and jewelry. 

  • What’s excluded unless additional coverage is purchased?

Certain catastrophes, like flooding or earthquakes, are generally not covered by basic homeowners policies and require specialized insurance. Furthermore, if you run a business on your property in a separate structure, it’s generally not covered by a standard homeowners insurance policy. Coverage may be limited on certain types of high-value items, such as jewelry or artwork; often, additional coverage is purchased specifically for such assets. It’s important to ask whether you’ll need to get additional coverage to cover specific high-value items in your home. 

  • Does my insurance policy have replacement cost or fair value coverage? 

Not all insurance policies offer homeowners the replacement cost of the property. Buying coverage for replacement cost helps to bridge the gap caused by inflation and the loss of value when property is no longer new. Otherwise, when you claim a loss, the item in question will be assessed at the current fair market value. Many items depreciate quickly, and you might not get enough money from a claim to replace these lost or damaged items. Replacement-cost coverage ensures you’re able to replace the items that were lost with similar items. If having this coverage is important to you, you’ll want to be sure both your home and personal property are covered in this way.

  • What’s the cost of any additional coverage?

Costs for additional coverage can vary greatly depending on a variety of factors, so be sure to ask what they are and what factors contribute to that price. 

  • What types of damage are simply not covered by any level of home insurance coverage?

Certain natural disasters or unavoidable events, which are sometimes referred to in an insurance policy as “acts of God,” will not be covered. 

  • How much does the insurance policy cost, and how much would any additional coverage cost?

Make sure you understand what’s covered and what’s not covered in your homeowners insurance policy because you may need additional coverage. This is sometimes called a “rider,” which is an adjustment or an add-on to an insurance policy. You may need additional coverage for property and possessions such as a pool or spa, outbuildings and accessory dwelling units (ADUs), or exceptionally valuable jewelry. By purchasing a rider on top of your standard coverage, you may be able to increase your coverage limits, expand coverage for certain property or extend protection to help cover additional perils.

  • How much is the policy deductible? 

Choosing a higher deductible amount usually means lower payments, but the tradeoff is that a homeowner would assume more upfront costs to repair damage before their policy coverage kicks in.)

  • How can I save money on this policy?

Be sure to ask how you can save money on this policy. For example, bundling with an auto policy, increasing your deductible, or adjusting your coverage may all help lower your yearly premiums. 

Still have questions? Be sure to refer to our handy FAQs if you need to know more about the basics of buying home insurance. 

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