Navigating through the complex world of insurance companies can seem like a daunting task – often, because it is. There are scores of different types of insurance consumers can buy to protect themselves and their families from unfortunate events, but it can be difficult to tell what type of insurance you need when you're dealing with a home you own.
Unlike renter's insurance, homeowner's insurance is supposed to cover you when your home is damaged by some inclement event. When you're dealing with an insurance company, it's important to remember, though, that you should always read the fine print. Many consumers purchase home insurance only to later make a claim and have it denied.
Basically, if you own a home you should seriously consider getting some kind of insurance coverage. When you plunk down a lot of money for that down payment and the continual monthly mortgage bills, you want to make sure you're protecting your investment. First, let's look at the basics of what you need to know.
There is no home insurance plan that is one-size-fits-all. We all have different needs, live in different parts of the country, and are subject to various weather patterns that could impact our lives. Depending on where you live, you may be more inclined to skip home insurance, but for those in areas that are regularly walloped by hurricanes, for example, it's a prudent financial decision to invest in some homeowner's insurance.
Home insurance policies vary from state to state – much like all insurance policies. Nonetheless, many states have government resources to help their residents work through the process of figuring out which policy is the best fit. Therefore, a good place to start is either your state government's website or a quick Google search to find your state-specific resource.
In Massachusetts, for example, the state government provides residents with a white paper that can help guide consumers through the process. According to consumer protection advocates, the first step every homeowner should take when looking at insurance policies is to shop around – this can't be stressed enough.
With so many companies competing for a piece of the market, your plan can change drastically from one company to another. It's essential that you first look at as many insurance companies as you can to see what they cover, how much they charge and their financial situation. A lot of insurance companies went out of business during the recession so it's a good idea to ensure the company you choose is on solid financial footing. Make sure to check out their credit ratings; if they have a low rating, you may want to forego buying insurance from them.
Furthermore, because home insurance comes in differing blocks of coverage, it is ultimately up to the homeowner to ensure that you are buying the right package. The Massachusetts state government recommends homeowners consult homebuilders and other contractors to determine how much certain repairs cost to ascertain whether a policy is right for you.
"It is important to consider a dwelling limit that is high enough to rebuilt your home at today's labor and material costs in the event of a total loss," the Massachusetts government recommends. Also, you should "consider the level of coverage needed to replace your personal property and the contents of your home. Sufficient liability coverage will also help to protect you in the event you're charged with negligence in a lawsuit when others claim damages on or off your property.
Consumer advocates assert that it is absolutely essential to know what your home insurance covers and what it doesn't. Flooding, for example, is not covered by home insurance; following the devastating effects of Hurricane Katrina, many New Orleans residents sought compensation from their home insurance providers only to be turned down. Don't let the same mistake happen to you.
Now, if you're ready to start looking at different plans, you should also consult the websites of home insurers who work in your state. A good place to start is by asking around: You can post a question on Facebook, check out community message boards online, and ask your neighbors as they'll have detailed, location-specific advice of anyone.
A lot of insurance companies offer tools to help consumers decide what insurance is the best fit for them and while it's not the only research a consumer should perform, it is a great starting-off point. Allstate, which has pretty good customer reviews and is well regarded, offers users a quick, easy-to-use tool that can help you decide how much coverage you need depending on your age, income level and other factors; Liberty Mutual has a similar service.
In the end, buying home insurance can seem like a difficult challenge, and although it takes a little research, it is increasingly important for homeowners to protect their investments with home insurance.