How to get the best homeowners insurance policy for your needs

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.

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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.

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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.

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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.

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