A house is typically the largest single investment a person will make in their life and it’s important to protect it and the belongings inside with a sound homeowners insurance policy.
Insuring your house can be costly; the Insurance Information Institute estimates the average homeowners insurance premium rose by 6 percent to $835 in 2006 and projects that the average homeowner’s insurance expenditure will be $868 throughout 2007.
Better Business Bureau (BBB) recommends always checking an insurance agency out with BBB to make sure it has a good reputation and no unresolved complaints before making any decisions. BBB Reliability Reports are free and can be accessed at, www.bbb.org. BBB also offers the following advice on shopping for homeowners insurance:
Take an inventory - Taking an accurate inventory of your belongings, as well as assessing the value of your house will give you a better idea of the coverage you need and will help you file an exact claim if your house or belongings should become damaged. Take pictures or make a video of your belongings. And once you’ve finished taking inventory, keep the list in a safe location outside of your home, such as in a bank safe deposit box.
Consider your high-ticket items - A standard homeowners insurance policy might not be effective enough to cover all, or for that matter, any expensive assets such as artwork, antiques, furs or jewelry. You may need to take out additional coverage for your most valuable possessions.
Actual cash value vs. replacement cost - An important question you’ll need to answer early on in the hunt for homeowners insurance is whether you want coverage that will reimburse you for the cash value of your belongings (taking into account depreciation) or whether you want reimbursement for purchasing replacement items. The latter option will be a more expensive policy but it would pay more if any highly depreciable items, such as a couch, were destroyed.
Get recommendations – In addition to starting your search for insurance companies with BBB, you can also check with friends and family for referrals and advice in choosing an insurer. You should also check online for information offered by your state’s insurance regulatory agency. Each state has an insurance commission, and the National Association of Insurance Commissioners (NAIC) is the organization of insurance regulators from the 50 states, the District of Columbia and the five U.S. territories.
Consider the Environment - Insurance policies usually include damage from fire, lightning, wind and vandalism. But, depending on where you live, your house might face other dangers such as floods, hurricanes, or earthquakes – which aren’t typically covered. Many standard homeowners insurance policies do not cover natural disasters and you may want to consider additional coverage to prepare for the worst case scenario.
Shop Around - Get quotes from at least three different companies that are licensed in your state and make an exact comparison of cost-versus-coverage to determine the best value. You don’t want to choose a lower estimate only to discover later – when you need it most – that your policy does not provide the coverage you need. Also, make sure you ask about discounts for having additional home safety features such as fire and burglar alarms.
For more information and advice you can trust on protecting your home and personal belongings, go to www.bbb.org.