It’s easy to become overwhelmed by the number of details that come with buying homeowners insurance. Even for those who spend time reading up on insurance policies and jargon, it can still feel like a complete assault on your senses from the moment you start looking at home insurance quotes. To make sure you don’t get lost down the rabbit hole of home insurance, we’ve put together three simple questions you should ask before purchasing any home insurance policy. By thinking about how much risk we are willing to take, and what type of coverage we need, we can work towards finding a policy that meets our needs at a reasonable cost. Instead of getting hung up on minutiae and forgetting what matters most save money while keeping our homes safe and secure.
What are my home’s current risks?
Before we can figure out how much insurance we need, we first need to understand which risks we are taking on with our home insurance policy. While there are a few general risk factors that all homes are at risk of suffering, knowing which of these are a concern for you can help streamline the process of finding the right policy.
- Exposure to natural disasters such as earthquakes and floods
- Exposure to vandalism and theft
- Exposure to fire damage – Exposure to faulty construction
- Exposure to building collapses
- Exposure to non-insured causes of loss
- Exposure to other risks
What kind of coverage do I need?
As an example, one of the most important things to consider when purchasing home insurance in Maryland is coverage for loss by vandalism. If your home was damaged by a vandal who was covered by your homeowner’s insurance, you would be responsible for the cost of repairs. This is one of the most common coverage gaps in home insurance policies. If you want to protect your home from other types of loss, you’ll need to purchase comprehensive coverage. This type of coverage pays for your home to be repaired after damage from fires, floods, and other events. For homeowners located in coastal or high-risk areas, it is also important to consider the coverage for exposure to water damage. As climate changes and sea levels continue to rise, so will the number of homes that are at risk of water damage. If you live in an area that is susceptible to flooding, make sure to protect yourself with a policy that includes coverage for exposure to water damage.
How much insurance should I be looking for?
If you’ve done the first step correctly and determined which risks your home is exposed to, you can use this information to determine the right amount of coverage for your needs. To get an idea of how much insurance you should be looking for, break down the estimated value of your home based on its size and features. Add up the estimated value of all of your possessions, and then add an amount for your savings into an emergency fund. Homeowners who live in high-risk areas, and have a higher need for coverage, can also consider purchasing an additional policy of liability insurance. This protects your assets from being seized by a third-party lawsuit if you cause an accident while driving, walking, or using any other property.
Homeowners should take the time to get to know their insurance options and decide which coverage types are right for them. New homeowners can often be overwhelmed by the amount of information they need to understand the ins and outs of their policy.