Homeowners insurance protects the consumer from theft, natural disaster and other situations in which your home or its contents become damaged. Homeowners insurance is also called hazard insurance, and the policies widely vary, depending on your physical location and the age and size of your home. Learning about your home, shopping around and taking a hard look at your larger financial picture are all factors to consider when choosing homeowners insurance.
Step 1
Learn all you can about your home, using blueprints or other papers that document how and when your home was built. The age of your house and its plumbing and electrical systems, as well as the building materials used for construction can account for variations in homeowners insurance premiums. Homes built from stone and other less-flammable materials, and those with newer electrical systems can cost less to insure, according the Institute for Business and Home Safety. Arming yourself with this information will make it easier to get accurate estimates from insurers.
Step 2
Get estimates for homeowner policies from at least three different insurers before you choose a provider and policy. Ask for estimates that detail similar plans, but be sure you understand what the plan covers. For example, the New York Department of Insurance explains that a "basic" policy may cover windstorm and hail damage, but not damage sustained from the weight of snow or falling objects such as trees. Ask the cost for each add-on, such as premiums for hurricane or flood damage.
Step 3
Consider what the replacement value of your home and its contents would be if you sustained massive damage to your home, and choose a policy that gives you adequate coverage. Marshall and Swift/Boeckh, a construction-cost estimator firm, explains that replacement value covers the cost of rebuilding your home if you rebuilt today. Homeowners policies for market value or cash value may leave you short of funds, reimbursing you only for the amount your house would sell for today, or the cash value of the contents of your home.
Step 4
Determine whether you would rather have a lower monthly or yearly homeowners insurance premium with a higher deductible, or a lower deductible with higher premium payments. The Federal Consumer Information Center reports that raising your deductible can save you money in the short term, but if you file a claim, your out-of-pocket costs will be higher. The choice is one of personal preference; your financial situation could also be a determining factor when selecting a policy.
Step 5
Consider the discount you may receive by purchasing your homeowner's policy from the insurer that handles your auto or life insurance. Many companies offer a percentage discount to their multiple-policy customers. This financial incentive may help make the selection process easier, provided the homeowners policies offered fit your needs.
Tips and Warnings
- If you own expensive art, jewelry or other collections, ask you insurer about floater premiums. Floaters are add-ons to your homeowners insurance policy that cover a specific item of value.
Things You'll Need
- Blueprints of home
- Insurance estimates
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