How to Select Homeowners Insurance Coverage

A simple definition of homeowners insurance: an agreement to repair or replace your home and put your life back to where it was after a disaster/covered loss in return for a premium/payment.

Most standard homeowners insurance policies cover:

• The cost to rebuild your home after a disaster 
• Your contents inside the home in the event of a covered loss
• Liability coverage to pay medical bills if somebody is injured on your property
• Living expenses if you have to leave your home after a disaster

Some may also cover:

• Fire department charges in the event of a home fire
• Food spoilage after a prolonged power outage 
• Debris removal after a covered loss

2. Explore Your Options

One of the important choices you will make when selecting a policy is your limit of insurance. Your limit of insurance is the maximum your insurance company will pay you in the event of a covered loss. New homeowners will often consider their home’s resale value when deciding their limits of insurance. However, you are not insuring your home’s resale value. You want your insurance limit to cover the cost to completely rebuild your home after a covered loss. Beyond choosing your limits, you will also have optional coverages you can add on to your policy. These may include:

• Guaranteed Home Replacement Cost: Provides full replacement of your home in the event that your coverage limit is too low. This may occur due to unforeseen changes in construction material and labor costs.
• Personal Property Replacement Cost: Pays you the cost to purchase new contents regardless of the resale value or age in the event of a covered loss. Alternatively, standard coverage will pay you the cash value of your contents at their depreciated value. 
• Equipment Breakdown Coverage: Covers the breakdown of all your important home systems and personal major appliances. For example, air-conditioning systems, furnaces, compressors, laptops, televisions, home appliances, and hot-water heaters

Check out Auto Owners Insurance Companies interactive home tour to see Equipment Breakdown Coverage in action.

3. Choose the Right Insurance Company

Your local Town & Country Insurance agent will help you find the company best suited for your insurance needs. When you search for the cheapest insurance option online, you are most likely missing important details and coverages. A low price doesn't necessarily mean appropriate coverage. A local, independent insurance agent represents many insurance companies. They can provide you with personalized quotes from any of them based on your needs.

Read: Why Independent Agents?

An agent will help you dig deeper and find out exactly what is and isn’t covered under each policy you consider. Also, their success is dependent on representing quality insurance companies. So, they are very familiar with insurance companies known for superior customer service.

4. Bundle Your Insurance Policies for Extra Savings

Oftentimes, insurance companies offer multiple-policy discounts since they sell multiple types of insurance. If you buy more than one policy from the same insurance company you may qualify for policy discounts. So, if you have the option to bundle your policies with one insurance company, it is usually a good idea.

5. Remember to Look Ahead

Lastly, remember your home insurance needs may change over time. Your insurance agent is a great resource during changes to your home. As your home and family change, tell your agent. This will help make sure you still have the best coverages for your home.

Examples of these changes may include:

• Remodeling or renovating parts of your home
• Changes to who is living in the home 
• Changes to how much time you spend in the home throughout the year
• Upgrading the contents of your home
• Adding a deck
• Digging a pool
• Finishing your basement

Another aspect of your home that may change over time is the contents inside. It’s a good idea to keep an up-to-date home inventory to document the items in your home. Several free apps can help you capture the information quickly. You may also use the Town & Country Insurance Home Inventory Checklist.

Choosing the Best Homeowners Insurance for Your Home Doesn't Have to be Hard

Purchasing your first house and homeowners insurance is not something to rush through. The advice of your local, independent agent is a great way to ensure your home is covered properly.

Disclaimer: The analysis of coverage is in general terms and is superseded in all respects by the Insuring Agreements, Endorsements, Exclusions, Terms and Conditions of the Policy. Some of the coverage mentioned in this material may not be applicable in all states or may have to be modified to conform to applicable state law. Some coverages may have been eliminated or modified since the publishing of this material. Please check with your local Independent Town & Country Insurance Agent for details.