Purchasing insurance requires you to think about the worst possible situations: health issues, car accidents, fires, floods and home damage but it also helps you realize it’s good to be prepared and plan ahead. We don’t want to dwell on what could happen but it’s important to protect yourself from some of life’s biggest surprises or disasters.  This is especially true with your homestead. Damage to a home from an accident, natural disaster or fire is already stressful enough and lack of proper insurance will make a tense situation unbearable.

When it comes to protecting your home, it’s not just about safeguarding against structural damage, fire or theft. It’s just as important to feel safe and secure where you live.  If disaster strikes, your focus should be on reclaiming your sense of stability.  The last thing you want to worry about is money or how you will fix your home.

Below is a list of the top 9 things to consider when shopping for and purchasing insurance.

What’s Covered

A standard policy will pay for damage to your property and certain possessions in the event of storms, fire, theft or vandalism.  Like renter’s insurance, it also provides liability coverage if someone gets hurt on your property and decides to sue.  Homeowner’s insurance also covers relocation housing costs so you don’t have to face high hotel bills should you be temporarily displaced from your home.  In some cases you may need to take out a separate policy for flooding. This is something you’ll want to discuss with your insurance agent and realtor. If the home is located in a flood plain, you may be required to purchase additional coverage if it’s not already included

What It Doesn’t Cover

A standard policy has exclusions, including earth movements (landslides, earthquakes, sinkholes), power failure, war, nuclear hazard, government action, faulty zoning, bad repair or workmanship or defective maintenance and flooding.  Windstorms are usually covered and this can include tornadoes but insurance companies can exclude tornadoes or hurricanes in some high-risk areas.  Water damage can be a tricky coverage item and you need to really read your policy very carefully. Normally, water from (above) rainwater or a busted pipe in an upstairs apartment or attic is usually covered. However, water from (below) backed-up sewers and ground flooding may not be covered but every policy is different. If your region is prone to floods and earthquakes, you should consider supplemental coverage.

Always Shop Around

Before committing to an agent, policy and even insurance provider take the time to research and shop around.  When considering all three of those factors (agent, policy, carrier) you should make a detailed list and then go over it with agents or carriers to determine the right fit for your home and budget, more importantly your peace of mind.

Your lists should include:

• Detailed description of your home and areas of coverage (include upgrades)

• All questions you have about floods, water penetration and repairs

• A list of extra coverages you may want or need

• A list of contents or personal belongings that may be covered

• A list of discounts you may be entitled to

• Scenarios that you may encounter in your neighborhood or area

You also need to determine if you even need an agent.  In some cases agents can get you better deals (especially on bundles) and they can lend a helping hand when disaster strikes.  If you do get an agent interview then, check their rating and make sure it is an agent you can trust. On the other hand you need to determine if you should deal directly with your carrier and cut out the middle man.

Preventive Actions Can Reduce Premiums

It may sound like common sense to have a working smoke detector but did you know that it might also help you get a lower insurance quote? The same goes for a burglar alarm.  According to insuranceagents.com, you can reduce your premium by about 5% if you install something as a simple as a deadbolt, and up 15-20% for a burglar alarm system. Insurance companies price your premium based on how much risk they foresee, so you can reduce the premium by reducing your liability risk, thanks to some smart preventive measures.  For example, if you have a pool, you may be able to reduce the likelihood of a claim and possibly lower your premium by adding a fence.  Installing a fence and pool cover will minimize the risk of a neighborhood kid wandering onto your property and possibly falling in.

How Replacement Coverage Differs From Market Value

There are two key distinctions that every homeowner should know: “replacement cost” vs. “market value.” Replacement cost covers repairing or replacing your entire home.  Market value is how much someone would pay to buy your home and accompanying land in its current downtrodden condition.

When you’re considering the type of coverage to take out, a policy that’s based on market value is typically less expensive but, as State Farm puts it, “for a cash-strapped homeowner, buying a policy based on market value offers the best chance to recoup at least partial expenses after a loss.”  In other words, you won’t recoup as much in the event of a serious disaster.

For those who have a good emergency fund in place, there is a way to possibly get more substantial coverage and still pay lower premiums: “You might consider getting a policy that covers more in terms of replacing or rebuilding your property, but with a higher deductible.”

Filing a Claim

When buying a policy you need to ask about time limits to report a claim and then follow them.  If you wait too long, you may not be eligible for benefits, especially if waiting has made the problem worse. For example, if you have water penetration from a storm and then you delay in reporting it and mold starts growing, the insurance company may not cover it.  You also need to know the procedure and instructions on how to properly file a claim and their response time.

Document Everything

You need to document everything when dealing with insurance companies.  Take photos and keep a journal in the event of loss or damage. In fact, this should start from the beginning with your policy.  Highlight specific areas in your policy binder so you can find the info quickly should you be in the middle of a disaster.  Find out before you go with a carrier if there are any major issues of non-payout with a large amount of policy holders, especially lawsuits