Home Insurance Liability Insurance Insurance Policies Home Insurance Coverage

If you’re a first time buyer, purchasing a homeowner’s insurance policy seems like a daunting task. You know you need one, but you’re not sure where to look or what to look for in a policy.

So what are the most important things you should know before buying any homeowner’s insurance? There are four areas your policy should cover:

1) Your Home: Your policy should makes it possible for you to completely rebuild your home in case of severe damage from hurricanes, fire, lightning, hail and other disasters. Floods and earthquakes are often not covered in standard policies and require a separate policy. Most homeowner’s insurance policies often cover damages to detached buildings such as your garage, gazebo or tool shed. Detached structures are covered for 10% of the insurance amount on your home. Make sure that you have enough to cover the cost of rebuilding at the current costs of construction. You can get a Guaranteed Extended Replacement policy which will cover any increases in construction costs.

2) Homeowner’s insurance for your possessions: If your home is insured for $120,000 most insurance companies will insure your belongings anywhere between 50% to 70% of that amount or $60,000 to $84,000 in this example. The best way to determine whether you have enough coverage is to do a home inventory. An up-to-date inventory will help settle your claims a lot faster and help you decide the amount of insurance you really need. Every item you own, where you bought it including sales receipts and serial numbers should be recorded.

3) Liability protection: It covers you against any bodily injuries and harm that you or your family members including your pets impose on other people in your home or in the homes of your neighbors. Liability coverage also pays for the costs of defending yourself in court and any court charges up to the limit of your policy. Limits start at around $100,000, but you should have at least $300,000 in protection. The liability of your homeowner’s insurance policy usually provides no-fault medical coverage in case a friend or neighbor is injured in your home. Your policy can pay for the medical bills incurred by your friends so you avoid having a liability claim filed against you. You usually can get $1000 to $5000 of coverage.

4) Additional living expenses: This insurance helps to pay for those hotel bills, meals and other expenses while your home is being rebuilt after a disaster. This coverage differs between homeowner’s insurance companies. Most policies will provide 20% on the insurance of your home. You can raise this coverage with an additional premium. If you happen to rent part of your home, you are reimbursed for the rent you would have received from your tenant if your home hadn’t been destroyed.

Lastly, you need to know how to choose the insurance company that provides the best policy for your needs. Here’s where you have to do some digging. You should look for:

* Licensing: Not every insurance company is licensed to operate in every state. Check with your state insurance department to find out if your proposed insurer is licensed to do business in your state.

* Price: Get at least three quotes from insurers. They are not always the same. Again check your state insurance department for information.

* Financial security: That means the financial stability of the insurance company you pick since you will want them to be around for many years.

* Service: The company you select should be able to answer all your questions and handle your claims efficiently and quickly. Are they easily accessible? You can check a national claims database to for any complaints on any homeowner’s insurance company you plan on taking out insurance with.

While there’s a lot more to purchasing an insurance policy, these will give you a better understanding of basic homeowner’s insurance and what to look for before buying one. The bottom line is the peace of mind knowing that you are covered for any eventuality.