How to get the best homeowners insurance policy for your needs

Ruben Onsu

Is your policy offering the right protection? Are you paying too much? Use this home insurance guide to find out. (iStock) Having adequate insurance is critical as a homeowner. Not only does it protect your investment (the home), but it also keeps you from being financially drained if an unexpected […]

Is your policy offering the right protection? Are you paying too much? Use this home insurance guide to find out. (iStock)

Having adequate insurance is critical as a homeowner. Not only does it protect your investment (the home), but it also keeps you from being financially drained if an unexpected disaster should occur.

Unfortunately, nailing down the right policy can be tedious. There are all kinds of home insurance coverage to consider — some that are required by your mortgage lender and some that are optional. Even for an experienced homeowner, it can be a lot to think about.

Are you preparing to buy a home? Or just want to make sure your existing house is properly covered and protected in case of emergency? Here’s what you should consider when building that policy:

  • Dwelling coverage
  • Contents coverage
  • Liability coverage
  • Loss of use coverage
  • Additional coverages

Dwelling coverage

This is coverage for the actual structure of the home. If your property is damaged or destroyed in a fire, for example, dwelling coverage would kick in and cover the costs of repairs or reconstruction. There are some damaging events that may be excluded, so make sure you read the fine print. (Floods are usually one of them).

The price you’ll pay for dwelling coverage will depend on the cost to rebuild your property, as well as local construction rates, lumber prices and other material costs. Because these costs fluctuate, it’s important to update your dwelling coverage regularly — both to ensure proper protection and to get the best rate.

Comparing coverages across home insurance companies can also help. If you’re wondering if you could save money by switching, head over to Credible ​who has partners to give you a free quote.​ It only takes two minutes.

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Contents coverage

Contents coverage protects the belongings or personal property you keep in your house — things like electronics, clothing, furniture and more. If these items are damaged by a leaky pipe, blown away in a tornado, stolen, vandalized or otherwise impacted, this coverage would pay to replace them.

Typically, there are dollar limits on the items that content coverage extends to. Higher-ticket items like expensive jewelry, collectibles and artwork may require separate coverage. 

With different coverage amounts, it’s important to shop around to find the right home insurance plan that fits your needs. You can use Credible’s tools to compare home insurance companies and policies now.

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Liability coverage

Liability coverage is used to cover legal fees if you’re sued due to an injury or property damage that occurs in your home. This could also include injuries suffered from animals on the property, such as a dog bite, for example.

This coverage will also cover any settlements that stem from those lawsuits. So, if the victim is granted $50,000 in damages, your liability coverage would help cover the costs.

Loss of use coverage

If a hurricane or natural disaster were to displace you from your home — or other damage like mold, a pest infestation, etc. rendered your home inhabitable — then loss of use coverage would be able to help. This covers the living expenses you’d incur by living off-site, including hotel costs, food, gas and other basics.

To make sure you are not overpaying for your current homeowner’s insurance, ​perform a free check online through Credible’s partners.

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Additional coverages

Those are the four basic types of home insurance coverage, but there are other add-ons you might want to consider, too. First, if you’re in an earthquake- or flood-prone area, getting separate earthquake or flood insurance is smart. Many times, it’s actually required by your mortgage lender.

If you operate a business out of the home, you should also consider adding business coverage to your existing home insurance policy.

Finally, identity theft coverage can be a wise choice as well. This pays for the financial damage caused if you fall victim to identity theft.

Check in on your policy

If it’s been a while since you’ve looked at your home insurance policy, consider this an opportunity to do so. Make sure your dwelling coverage is adequate given the current market and double-check that all your belongings and liabilities are properly covered. If you added a pool, for example, increasing your liability coverage might be smart.

You should also shop around and make sure you’re getting the best rate to help you save money. Comparing multiple homeowners insurance quotes can potentially save you hundreds of dollars per year. It’s easy to get a free quote in minutes​ using Credible.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

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