While purchasing a homeowners insurance the first issue of extreme concern is the amount of coverage you want. A recent survey conducted by the Insurance Information Institute revealed that two-thirds of all homes in America were under insured by an average of 27%. Thus it is important to opt for a right amount of coverage.

If you are finding it difficult to calculate the extent of coverage you want, there are several ways to do it. For instance if you want coverage for reconstruction of your house then multiply the square foot of your home by the local building cost per square foot. To know the cost of rebuilding your house, also known as dwelling coverage, you can take the help of any local insurance or real estate agent.

For instance in Nevada an average of 1268 square foot home that was built in 1997 has a current dwelling coverage of $81000. However if the homeowners feel that they are under insured by 27% and increased their coverage to $110,000, the monthly payment will increase by $7.50 per month.

Since most often the homeowners insurance also compensates for personal liability, you should also keep in mind how much coverage you require for certain legal expenses, medical expenditure or injury to any member of the house.

Though a standard homeowners policy comes with liability coverage of worth $100,000, insurance professionals usually advise to get of coverage of around $300,000 to $500,000 as liability coverage. To have this extra amount added to your standard homeowners policy, purchasing an endorsement is a wise idea.

You can also go for personal umbrella coverage in case the worth of your assets is more than $300,000 to $500,000. The umbrella cover is extremely useful once you are through with your homeowners or automobiles coverage. For instance if your colleague is injured at your house and revengefully sues you for $500,000, your homeowners insurance will cover for $300,000 and get exhausted but the amount left will be easily covered by the umbrella coverage.

For insuring your household things there are three ways. First is the actual cash value in which the policy pays for replacing your personal property using the method that is based on replacement cost of the thing minus the depreciation?

Second is the replacement cost strategy where you receive current amount for the thing you lost in any of the covered dangers. Though this way requires you to pay an additional premium but it can prove extremely beneficial in the long run.

The third option is the guaranteed replacement cost. This coverage means that there is no maximum payout applied to coverage of your insured personal possessions. You need to pay an extra premium but on the same hand increase your deductible to make the coverage somewhat cost-effective. Similarly the structure of our house is also to be insured in these three ways but with slight variation.

According to current facts and statistics presented by National Association of Insurance Commissioners in 2002 the average expenditure on homeowners insurance increased by 12% from $593 to $668 in 2003. Expenditure varies with the state. For example in 2003 Texas witnessed the highest average expenditure of $1328, in Oregon it was $461, Delaware $442 and Maine $462.

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Typical Homeowners insurance policy has two main sections. Section 1 includes the property of the insured and Section 2 includes the personal liability coverage that needs to be insured.

At times, lender might require homeowner’s insurance as part of requirement in obtaining a mortgage. While buying home insurance policy one has to keep certain important things in mind. One needs the best level of protection as well as the provisions for valuables like jewelry, computer equipment, kitchen appliances and other possessions. In order to have adequate home insurance coverage one must check with agent or home insurance company beforehand to be sure of the adequate coverage instead of relying on the coverage mandated by the bank or mortgage company. Those levels are for protecting the house only and eventually skip the protection of possessions.

While applying for home insurance the insurance company needs to know about your present occupation, employment history, marital status, date of birth and social security number. The insurer needs to check the credit criminal and insurance history. Insurance claims of past is also checked by the home insurance company. The decision to chose a specific type of homeowner’s policy, deductible and how to pay for the coverage depends upon the homeowner.

There is exception to destructions like flood, earthquake and poor maintenance of house. Home insurance is needed and most lending institutions will require the homeowners to acquire a certain amount of coverage before issuing a loan to purchase property. The lender has a vested interest in property and wants to ensure financial compensation in the event of disaster. Homeowners may suffer a default of loan if they fail to carry the level of coverage needed.

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A primary part of your homeowner’s policy is for the homes structure. It would often cost more to rebuild the home than what the homes appraised value is. I suggest getting a policy with a coverage amount of the rebuild cost, or the appraised value, whichever is higher. Most insurance companies have software that can calculate the rebuilt estimated amount. Next you should make sure the policy has sufficient coverage for any other structures such as a detached garage, storage shed, swimming pool, etc.

There will be a separate limit listed on your policy for personal property. Make sure the limit is enough for what you own. Your agent should also explain how a loss would be paid. The best coverage is where your property would be covered for what it will cost to purchase new goods of equal quality. Some types of personal property have sub limits. For example you may have a personal property limit of $75,000 with a sub limit of $1,000 for computers. If the sub limit is too low you may be able to increase that sub limit at additional cost. Other sub limit examples could be guns, jewelry, currency, paintings, etc…

The personal liability portion of your policy protects you from loss for injuries to others. For example if a guest slips and falls on a wet floor or your pet bites someone. Your agent should explain exactly what is covered and what your limit options are. Typically you might get $300,000 in coverage with the option to increase to $500,000 at a small additional cost.

There are other elements to a policy. I suggest taking some time to compare policies from a couple different companies. Your state insurance regulatory department may have information to help you shop. The least expensive plan may not be the best buy! Make sure your coverage meets your needs and that your agent carefully explains the details. In many cases you will save by getting your auto and homeowners insurance from the same company. You can usually save on the premium by going with a higher deductible. Ask your agent to give you information on the cost with different deductibles. Note that your mortgage lender may have rules about the coverage and deductible for your policy.

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Check your homeowners or renters policy first
If you have home insurance, a condominium owners policy or renters insurance, your policy will most likely include coverage for a limited amount of jewelry, usually $500 or $1,000. The limit of coverage applies to all jewelry you own, so be sure to consider the value of all your jewelry before deciding that it’s enough coverage.

You have two options for buying more coverage than your home insurance offers. You can add more coverage to your home or renter’s policy by adding an endorsement to cover the appraised value of your ring or all of your jewelry. This type of policy endorsement is sometimes called a floater or jewelry floater or a personal articles policy. The cost is based on a certain price per thousand dollars of insured value, usually around $2 to $5 per $100. So, the cost to insure a $3,000 ring might range from $60 to $100 a year. If you have a loss, your insurance company has the option of paying you the appraised amount or replacing the ring.

If you don’t have home insurance or want to compare rates before you insure your ring, try a jewelry insurance specialist. Many companies will offer an online quote, so you can compare costs and coverage. An appraisal from a certified jeweler will be helpful to establish the value of your ring whether you buy online or from an agent.

Finally, while you’re at it, take a few minutes to review your insurance coverage for all of your valuable items, including computers and electronics. If you need help finding out if your valuables are properly insured, contact your insurance agent or insurance company for more information.

Handle with care
You can’t insure your ring for daily “wear and tear.” So be extra careful while cleaning or doing household chores. Harsh chemicals can damage precious stones and metals, especially platinum, and a rough blow can easily dislodge a stone from its setting. A jeweler can polish your wedding bands, but it’s not a free service, so try to avoid scratches and nicks when you can. And, it’s a good idea to have a jeweler check your ring every year for loose prongs or stones. It costs little to replace a prong—and you’ll avoid an insurance claim in the long run.

Some jewelers offer a service plan to cover wear and tear. These plans are usually either included in the price of the ring or available after purchase for a percentage of the original price. Service plans almost never cover theft, loss, or damage beyond normal wear and tear, so they are not a substitute for insurance.

Hold on tight
OK. These tips might sound like they came from your grandmother, but seriously—who wants to take a chance?

* When you take off your ring, always put it in the same place. A ring-holder is a great idea.
* Don’t place your ring on the counter next to the sink when you wash your hands—unless the drain opening is covered.
* Sunscreen is slippery—so be careful not to lose your ring at the beach or pool—or on your honeymoon.
* Resize a ring that doesn’t fit, even if it costs extra. Rings have fallen off the hands of the newly engaged and been lost forever, so ignore this advice at your own risk.

Insurance can never replace the sentimental value of a wedding ring, but it can give you some peace of mind and protect your investment.

[Source]

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1. Get several quotes. Because there are so many companies out there you should talk to an agent and get some quotes from each company. An agent should be able to answer all of your questions about the types of coverage you can get.

2. Pay yearly. If you pay all at once you usually get a discount, much like car insurance. If you can choose a company you already have insurance with (such as car insurance) you might get a discount for having two types of coverage with them.

3. Document your household inventory. If something should ever happen such as a fire, flood, or other act of god you should have an inventory of the things you had in your home. Include as many of your belongs as possible, and update often.

4. Check for new rates and any possible changes at least once a year. There are several things that could change and make a difference to your yearly rates. For instance you might get a new dog, think of getting a swimming pool, or inherit some antiques or jewelry. You would want these extra things to be added onto your policy in case anything happens.

5. Be safe. Home insurance companies like it when people have security systems in place, and if possible a sprinkler system. Both of these would help cover you greatly from things such as theft and fire. The results of having these in place could dramatically cut your yearly rates, even if they do cost a lot to install.

On top of all of these things where your home is located is going to make a HUGE difference in your premiums. Think of places where they often have hurricanes or other natural disasters. The people in these areas usually pay a high premium because of the increased chance something will happen.

Additionally if you live close to water you will have to get flood insurance. Flood insurance covers your home in case you get water in your basement or if you have other water damage. Although flood insurance in pretty expensive some places you will be better off getting it because of how insurance companies view water damage. For instance many homes that got damage from Hurricane Katrina a few years ago did not have flood insurance, and while they were covered for the hurricane and wind damage, the water that came with the hurricane flooded the homes and for many this wasn’t covered.

With home insurance it is always a better idea to use an agent but also talk to the company directly to know for certain any information you need. Both the company and the agent should give you the same information but this isn’t always the case, so if you have any questions contact the company directly if the questions are specific to your policy.

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The most important coverage contained in your policy is dwelling coverage. The amount you have for the dwelling is the maximum the insurance company will pay in the event your house is damaged or destroyed. The amount of dwelling coverage is determined by taking into account various factors, such as the interior square footage of the living space, the construction type, the year built, the number of bathrooms, etc. Using this data, your agent can calculate approximately what it would cost to rebuild your home. This number has nothing to do with the real estate appraisal value for your home; it is simply the amount of money required to reconstruct your house from scratch.

The next coverage listed on your insurance is called other structures. The amount of coverage available for other structures is customarily equal to 10% of whatever the dwelling coverage is. Detached sheds or detached garages fall into this category. Some people do not have any detached structures on their property, but the coverage is automatically included with the policy, sometimes at no cost.

After other structures you will see something called personal property. Personal Property includes all of the contents in your home. This includes furniture, rugs, beds, televisions, etc. Most homeowners policies provide personal property coverage equal to 50-70% of whatever the dwelling coverage amount is. You can call your agent to adjust this amount up or down depending on your individual needs.

Next is loss of use coverage. Loss of use is ordinarily 20% of whatever your dwelling coverage amount is. This covers expenses associated with having to move to another location temporarily if there is a loss at your home that prevents you from living there while the damage is repaired, such as a fire that destroys most of the home, or a severe mold problem.

The last important coverage, perhaps the most important to some people, is personal liability. You should maintain $500,000 of personal liability coverage. This coverage protects your liability in the event that something happens to someone while on your premises (such as slipping on an icy walkway), or when you do something that inflicts damage to persons or property while you are off premises (what kinds of activities are covered off premises varies depending upon the insurance company).

Now that you understand the most important components of the policy, you should also be aware of some other valuable coverages that you should ask your agent to add to it. You should probably request coverage for personal injury (libel, slander) and identity fraud be added. In addition, you can add coverage for your valuable items for an additional premium (such as jewelry, fine arts, fur coats, etc.). And finally, you should ask for an umbrella to be added to the policy. An umbrella provides additional liability coverage above the amount of underlying personal liability coverage. You can request anywhere from $1 million to $5 million dollars for your umbrella; some companies go as high as $10 million.
I hope this has helped you to make better decisions pertaining to your homeowners insurance. Even though everyone who has a home has insurance, most people have no idea what it covers. Then when it comes time to file a claim, they find that their policy does not meet their needs sufficiently. Use the information that was presented here to help you make intelligent choices so you can be prepared if something happens.

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