What to look for in a Home Insurance Policy

Anyone who has considered purchasing a house knows that home insurance is a major factor to consider before buying.  Despite what that insurance salesman might tell you most policies are similar to each other in their cost and coverage. 

It is truly the seemingly minor things that can make a big difference. Some mortgage companies require a one or two year escrow account that automatically pays the taxes and insurance as part of your monthly payment.  Many homeowners elect to make these payments separately after the escrow period has ended and now have to select their own insurance company.

First, and most important, is the track record of the company that is to provide your insurance:  not all insurance companies are created equal.  Do not choose your company by either the price they offer or the name they are trying to sell. 

Some of the biggest and better known insurance companies have horrible track records in customer service and claim settlement.  Do a thorough search of consumer sites that rate home insurance companies and canvas their comments.  Remember every poor or bad experience reported actually represents up to two hundred other similar reports that have never been recorded.

Next make sure that the home insurance policy satisfies the mortgage company’s requirements.  The policy coverage must be acceptable to the money lender or it is a waste of time and money.  Most mortgage companies will be happy to provide a list of insurance companies (and agents) that are acceptable to them but make sure you make up your own mind.  It is best to find your own agent and set up a working relationship with them to insure that you have the policy that fits your needs.

Make sure that the policy covers the full replacement value of your home and will automatically increase as the cost of rebuilding your house increases due to inflation.  The policy should stipulate that the house will be rebuilt to its former specifications after a major catastrophe.

Understand what is not covered in your home insurance policy.  Some people are unhappily surprised to find out that the contents of their home were covered for fire loss but not covered by the water damage caused by the firemen putting out the fire. 

Others were sold ‘flood’ insurance when their house sat on the top of a hill outside a flood plain area.  Do not be afraid to ask any questions about coverage that comes to mind and make sure that the agent shows you where your coverage is in the written policy.

Finally, make sure that the policy is comprehensive in scope and is tailored to meet your particular needs.  If you have antiques or collectables then the policy must reflect their replacement value in its coverage. 

If you happen to own valuable paintings, furniture, or even jewelry, then make sure that these items are covered in your home insurance policy even if you must pay a little more so that they are included in an addendum.

If you follow these simple steps then you will find that choosing the right company and home insurance policy will be a simple matter and that you will be able to rest easy knowing that you are fully protected in the face of disaster.