What to Consider When Buying Homeowners Insurance

Whether you are just about to buy your very first home, or you’ve lived in the same one for 20 years, there are always things to consider about your homeowner’s insurance policy. Your house is likely your biggest financial asset, which is why you want to be sure it’s protected. Let’s talk about making sure you have the coverage you actually need.

Let’s start with the basics. What is homeowners insurance and why do you need it? Beyond protecting your highest valued asset, homeowners insurance is designed to cover many aspects of the home and your property. Each type of insurance can often be bought separately or in one, all-inclusive package.

• Coverage A: covers the replacement of the home, should it be destroyed
• Coverage B: other structures on your property (i.e. sheds, detached garage, etc.)
• Coverage C: covers the personal property within the home
• Coverage D: offers assistance for other living arrangements if displaced (i.e. a hotel)
• Liability Coverage: to cover any accidents that may occur on your property
• Umbrella Policy: a secondary plan to cover over and above liability limits

You will also want to note that many policies do not cover flood damage. To better understand flood insurance policies, click here.

Typically, you will want to cover the cost of a replacement, should your home be destroyed. It is recommended that you have a minimum of 80 percent of the value of your home. For a simple example, if you home was worth $300,000, you would want your policy to supply a minimum of $240,000 to replace it.

Other portions of your policy will largely depend on what you own. If you have no detached structures on your property, you may not need a hefty Coverage B plan, as there isn’t much to protect. On the other hand, you may have valuable personal property, such as fine artworks, antiques, and high-end jewelry. In that case, you may want to beef up on Coverage C to cover the cost of replacing those items.

Many buyers select a homeowners insurance policy based on the cost of the monthly rate. However, you absolutely should understand all aspects of that policy, including the costs of a deductible (or the price you pay to file a claim). If a homeowners policy is only $100 a month to have coverage, but your deductible is $3,000, you aren’t likely to file a claim for any minor incidents. Be sure to understand the terms, including the deductible, before signing on the dotted line.

Additionally, you may want to review your policy from time to time. Life changes at a rapid pace, and so too might your homeowners insurance needs. If you’ve been in your house for some time, it is a great idea to review your policy coverages, and be sure your package still fits your needs.

Minnesota offers state resources via its Consumer Services Center . You can reach this assistance to answer questions or guide your purchasing journey at:

Greater MN: 1-800-657-3602

Local: 651-539-1600

E-mail:  consumer.protection@state.mn.us

However, if you want a personalized touch, to guide you through each and every step, tailoring a policy for your individual needs, it is best to seek the assistance of a professional, such as myself. 

The benefit of independent agencies, such as mine, is that not only can we review every reputable option to find you the best package possible, but we can also take the time to personalize the policy, to create a plan that fits your unique needs. Schedule an appointment today , and we can help guide you through your homeowners insurance purchase.