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What to Ask Your Independent Agent When You Purchase Homeowners Insurance


The process to purchase homeowners insurance can be a stressful one for many home buyers. Your home is a complex asset, and your homeowners insurance is not a one-size-fits-all policy. Having a conversation with your independent agent about what to include and what not to include in a policy can make all the difference in giving yourself peace of mind that you are covered. This article discusses some important questions that you can ask your independent agent when you purchase homeowners insurance.

Question #1: What Does This Homeowners Policy Cover?

Knowing the basic coverages of a standard homeowners policy is a good start. Generally, according to the Insurance Information Institute, homeowners coverage includes four types of coverage:

  • Dwelling Coverage: This is the part that covers the house itself. Coverage is usually available for detached structures, such as sheds, as well.
  • Personal Property: This is the part that covers your personal belongings, such as clothes, furniture and electronics. It covers the repair cost or replacement costs of personal property that is stolen or damaged in a covered event.
  • Additional Living Expenses: This is the part that covers your costs if you need to find another place to live for a while, for example, if you have to stay in a hotel. It covers temporary living expenses while your home is being restored.
  • Liability: This is the part that protects you if you’re sued in certain situations, for example, if a guest is injured in your home. It covers bodily harm or property damage to a third-party that occurs on your property. It may also provide no-fault medical coverage.

When you purchase homeowners insurance, each of these coverages will have a set limit of coverage. Talk to your independent agent on the amount of coverage you need for a homeowners policy to fit your specific needs.

Question #2: What Types of Homeowners Coverage Do You Provide?

Different homeowners policies will provide different levels of coverage. According to Investopedia, policy forms designated HO-1 to HO-8 offer different levels of protection depending on the residence and homeowner needs. The most popular homeowners coverage types are:

  1. Actual Cash Value: This option covers the actual value of your home plus your personal property minus depreciation. In other words, this covers the current value of your assets rather than the cost you purchased them for.
  2. Replacement Cost: This coverage is equivalent to the actual cash value of your home and belongings without a deduction for depreciation. This option allows you to rebuild your home up to its original value.
  3. Guaranteed/Extended Replacement Cost Value: This option would cover whatever the cost to rebuild your home, even if that cost exceeds the policy limits. The most comprehensive coverage, most carriers offer a coverage ceiling of 15 to 20% of your policy limit.

Ask your independent agent which coverage option is best for your individual needs and the residence you want covered.

Question #3: What Is Not Covered by This Homeowners Policy?

Knowing what you have covered under a homeowners policy is important. However, what may be more important is knowing exactly what is not covered under that same policy. According to the Insurance Information Institute, a standard homeowners policy generally does not cover:

  • Flood
  • Hurricane
  • Earthquake
  • Routine tear and wear

Additionally, art, jewelry and other expensive items may not be fully covered due to the limits in the policy. Although not normally covered by a homeowners policy, these coverages may be available at additional cost to your underlying policy. Make sure to ask your independent agent about what is not covered in a standard homeowners policy and how you can add on additional coverages to fit your needs.

Question #4: Is Homeowners Insurance Required?

Homeowners insurance is not required by law. It is highly recommended for homeowners since it can protect you from costly repairs and expenses related to accidents at your home.

However, most mortgage lenders will require a homeowners insurance policy. According to Bankrate, since your lender has a financial interest in your home, they will ensure that they can be paid out should your property suffer from a loss. Talk to your independent agent about what requirements your lender has for homeowners insurance in your area.

Get Help to Purchase Homeowners Insurance

The process of purchasing a house and finding the right homeowners insurance policy can be a daunting task. However, talking with an independent agent before you purchase homeowners insurance is important to ensure that you are covered based on your individual needs and your residence.

Need help getting started? Contact a FICOH agent today to discuss what you need for your homeowners policy.