Before you purchase a homeowner's insurance policy, it's wise to ask your agent a few questions so you understand what coverage you are and aren't getting. Agents may help you save money. Furthermore, if you consistently ask the same questions, you'll be able to better compare offers between different agencies.
Agents can quote different types of insurance coverage to change the cost. Usually, she will quote an HO3 policy that covers most perils except for a few specific ones. However, HO2 policies that give you less protection are also available. An insurance plan may include coverage for replacing lost or damaged items at their actual replacement cost as opposed to their cash value or coverage for personal liability or even for identity theft.
What's Not Covered?
Most homeowner's insurance policies exclude flooding, including floods caused by storms, earthquake damage, nuclear accidents and wars. In addition, the insurer might limit the amount of coverage available for certain valuables if you don't buy special insurance for them. Some items, such as cash, might not be covered at all. If you have a pet, find out if your policy includes liability coverage in case it bites anyone.
What Else Is Necessary?
The basic policy an agent quotes you might not be enough. You might need to add additional riders to cover certain valuables. Running a business out of your house, even if it's a relatively simple one such as consulting from an extra bedroom, also can complicate your insurance. The more you let your insurance agent know about your specific situation, the better he can suit your coverage to your particular needs.
What About Cost Savings?
Once your agent figures out a policy that suits your needs, ask how you can reduce the price. Insurers typically offer discounts for a range of different things. You might be able to save money with a multiple-policy discount by moving your automobile or life insurance to that same company. Security systems, fire extinguishers and smoke detectors frequently qualify you for discounts. New wiring and impact-resistant roofs can lead to lower premiums, as can quitting smoking. Increasing your deductible may also reduce the cost of your premiums.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.