<   Back to Blog

Top 10 Questions To Ask When Buying Home Insurance

When you’re buying homeowners insurance, don’t have any second thoughts about asking questions about the policy you’re eyeing. A home insurance policy represents a significant investment on your part, after all. So, when you’re talking to an insurance agent about homeowners policies, you need to ask the following questions:

1. Do I Have To Buy Homeowners Insurance?

Homeowners are not usually required to buy homeowners’ insurance. However, it may be mandatory if you acquired your home through a mortgage. Banks or lenders do this because they do have a stake in your home, and they want to make sure the house you acquired with their help is insured. If the question refers to whether there is a need to buy home insurance, it would be up to you to decide. Just keep in mind that no one knows what could happen in the future. A disaster like a fire can strike any home at any time. With homeowners insurance, you can at least get much-needed help to rebuild the damaged areas of your home.

2. What Perils Does A Standard Homeowners Insurance Policy Cover?

Your insurance company will compensate you if lightning, hail, windstorms, smoke, vandalism, or an explosion damages your home. Your policy will also cover the losses you incur in the event a burglar hits your home.

3. What About Damage Caused By Earthquakes or Flooding?

Flooding and earthquakes are not included among the perils covered by a standard home insurance policy. There are separate insurance policies for such disasters. Other perils that standard home insurance does not cover include intentional damage or loss neglect, power failure, war, or a nuclear explosion.

4. What Does Liability Coverage Mean?

All standard home insurance policies include liability coverage, which means you’re covered in case a visitor suffers an injury within your property and files a claim. It will also kick in if your child or any member of your family damages a neighbor’s property while playing.

5. What Is An ALE?

When your home suffers damage that renders it temporarily uninhabitable, you and your family will have to check into a hotel, eat out, and incur other expenses while repairs are ongoing. Such expenses will be covered by the ALE or additional living expenses feature of your homeowners insurance policy.

6. Is It OK To Settle For Basic Home Insurance Coverage?

While there’s nothing wrong with having only basic coverage on your homeowners insurance, it likely won’t fully cover the cost of rebuilding damaged parts your home or replacing the things you lost. If you only have basic coverage, be ready to spend money out of pocket to repair your home, or replace your losses.

7. Will I Pay Less For Homeowners Insurance If My Home Is Old?

In the eyes of an insurance company, the risk of an older home sustaining damage to its structure and fixtures is high. That’s why insuring an older home will tend to cost you more than if your home was a relatively newer build.

8. Does Homeowners Insurance Cover My Backyard Shed?

A standard homeowner insurance policy covers not only your main dwelling, but also your backyard shed, garage, and other outdoor structures.

9. If I Sell My House, What Will Happen To My Policy?

Any homeowners insurance policy is specific to the home in which you reside. When you’re selling your house, you are transferring its ownership, and that effectively cancels your home insurance policy for that home.

10. How Is Your Insurance Company Doing Financially?

There are many insurers operating these days, and you need to be sure if they are in a good enough financial standing to make payments to clients filing claims. You know that insurance agents will likely answer the above question in the affirmative, but ask the question anyway. Visit the NAIC (National Association of Insurance Commissioners) Consumer Information Source afterward to verify what your agent told you. There are still many questions you can ask, but the ones listed above are a good enough place to start. Pose as many questions to insurers as you’d like so that when you decide about homeowner insurance, you know that you’re making the right one.

Categories: helpful tips