5 Things to Understand About Homeowners Insurance 10 Ways to Lower Your Homeowners Insurance Costs

Insuring Against Loss
You will be required by your lender to have homeowners insurance at closing. You’ll probably pay the first year’s premium at closing. Homeowners can select whatever insurance provider they like. This allows you to shop around and find the best rates.

What is homeowners insurance, and what does it cover?
Homeowners insurance provides money to replace possessions after a fire or theft. Policies vary in what they cover, so be sure to find out exactly what is protected. Typically, homeowners insurance covers: your home, including extensions and attachments; the outdoor area around your home; buildings on the property not attached to the home (garages, tool sheds, etc.); living expenses incurred if your home is so damaged you can’t live there and your possessions. More or less may be included on your policy, so be sure to ask.

How do I find the right insurance for me?
Shopping for insurance rates is a little like shopping for a mortgage. You should consider only reputable companies and agents. Get at least three quotes. Make sure you are comparing the same terms. Some companies provide lower rates if you have more than one type of coverage with them, such as auto and home. Review your insurance coverage annually to see if you need to make any changes.

How much should I insure my home for?
Talk with your lender to find out how much you should cover. Typically, lenders will require that you insure the property for the initial amount of the loan. Because your lender owns part of your home until you pay the entire mortgage off, the insurance protects them as well.

What is replacement insurance?
Most insurers recommend that you insure your property at replacement cost. This reimburses you for what it would cost to replace items today, instead of paying only for their current, depreciated value. You'll pay a little more in premiums for this extra peace of mind, so shop around for the best policy and the best price.

How do I protect my things?
Remember to keep a good inventory of your property, including serial numbers. A quick way to do this is with snapshots or a camcorder. Store your inventory in a safe-deposit box or other location outside your home, and update it every year. While you're making an inventory of your valuables, consider engraving them with your name or driver’s license number. This makes it easier to trace the goods back to you if they're stolen. Many local police departments will loan etching tools.