Trying to nail down the right homeowners insurance coverage can seem like a Herculean task. But if you know the right questions to ask as you compare home insurance rates, you can arrange a policy that makes you feel like the family hero.
1. what does this policy cover, and what doesn’t it cover?
Homeowners insurance is one of the broadest types of coverages, with a huge range of possible claims. It pays to go over specific scenarios before you sign on.
Is a leaky roof considered water damage (which most policies cover) or flooding (which they usually don't)? If your TV is stolen, does your contents insurance reimburse the purchase price or the depreciated value? Your liability insurance covers injuries to people in your home, but what if you accidentally hurt someone away from it?
Anticipating possible incidents helps eliminate surprises, gives you an idea of how high to set your coverage limits, and shows you what other insurance plans you might need — like flood protection, earthquake coverage, or umbrella insurance.
2. how much stuff do i need to protect?
Take a home inventory before shopping for home insurance. This tells you the value of all your possessions, and you can set the limit of your contents insurance to exceed this number so you can replace any stolen or damaged items.
Knowing the value of your stuff also helps you decide if you need any insurance riders, which are additional policies for big-ticket items, such as jewelry or art, that go beyond the limits of your property insurance.
It's also smart to tally up your assets that aren't in the home, like stocks, savings, and real estate properties. This tells you how high to set your liability coverage limits so your assets are covered if guests are injured in your home and their bills get expensive.
3. what is the rebuilding cost of my home?
When purchasing dwelling coverage — the part of your homeowners insurance that handles damage to your abode's structure — you want protection equal to or greater than your house's rebuilding cost, not the purchase price. The price to rebuild your home after, say, a devastating tornado is often different than the price you paid for it. And you want to make sure you have enough coverage to restore your home.
4. is this insurance company dependable?
Your search for the best home insurance coverage will take you across the path of many a company promising low rates. But how do you know whether they're reliable companies you can trust?
For one, you can check your state's insurance department to confirm that a prospective company is licensed. You can also use A.M. Best to check the financial strength of a company.
(By the way, Esurance is proud to have an A+ rating from A.M. Best.* But we don't like to brag.)
5. what is the claims history of my home?
Getting informed about what happened in your place before you got there can tell you a lot about the incidents that could happen in the future. For instance, if your property has had sewage problems in the past, you probably want water backup coverage. Or if the house has been repeatedly damaged by wind or hailstorms, you might want to look into extended protection for the roof.
6. how will future claims be handled?
Every potential home insurer seems terrific…until you need them to, well, insure you. That's why it's a good idea to find out how claims will be handled. How promptly do they settle payments? Are they available 24/7? If your home is uninhabitable because of a covered loss, will they put you up elsewhere? How will filing certain claims affect your premium at renewal time?
To get a clear picture of how an insurer operates, it never hurts to check their Facebook page (if they have one) to see what customers are saying. Or just give them an old-fashioned phone call.