Home Owners Insurance - What to look out for?

You need enough insurance to cover the following:

The structure of your home.

Your personal possessions.

The cost of additional living expenses if your home is damaged and you have to live elsewhere during repairs.

Your liability to others.

The structure

You need enough insurance to cover the cost of rebuilding your home at current construction costs. Don't include the cost of the land. And don't base your rebuilding costs on the price you paid for your home. The cost of rebuilding could be more or less than the price you paid or could sell it for today.

Some banks require you to buy homeowners insurance to cover the amount of your mortgage. If the limit of your insurance policy is based on your mortgage, make sure it's enough to cover the cost of rebuilding. (If your mortgage is paid off, don't cancel your homeowners policy. Homeowners insurance protects your investment in your home.)

For a quick estimate of the amount of insurance you need, multiply the total square footage of your home by local building costs per square foot. To find out construction costs in your community, call your local real estate agent, builders association or insurance agent.

Factors that will determine the cost of rebuilding your home:

Local construction costs

The square footage of the structure

The type of exterior wall construction–frame, masonry (brick or stone) or veneer

The style of the house (ranch, colonial)

The number of bathrooms and other rooms

The type of roof and materials used

Other structures on the premises such as garages, sheds

Fireplaces, exterior trim and other special features like arched windows

Whether the house, or parts of it like the kitchen, was custom built

Improvement to your home–adding a second bathroom, enlarging the kitchen or other additions that have added value to your home

Standard homeowners policies provide coverage for disasters such as damage due to fire, lightning, hail, explosions and theft. They do not cover floods, earthquakes or damage caused by lack of routine maintenance.

First of all it is important to quote the policy based upon the same deductible and replacement value and value of the home contents to truly be able to compare them apples to apples. These are the primary issues at hand. Once these are compared you can begin to look at the insurance riders you might choose to add for things like water damage.

You might like them to spell out how they define an "act of God" too. You also need to remember that most insurance companies also include your credit score as a variable for the insurance.

The reason that the replacement value is less than the house is because the land the house sits upon has value too! And, to rebuild the size of house you have simply wouldn't cost all that much.

Discover your insurance companies policy on flooding, mildew & mold. After Hurricane Katrina a lot of companies got slick and dropped flood insurance so that they won't have to pay out after a natural disaster.

Here is a good article:

http://consumeraction.gov/caw_insurance_homeowner_...