First—some basic information
When you bought your home and insured it for the first time, your agent probably measured the home and asked you for basic information about the number of bedrooms, bathrooms, living spaces and extras like a fireplace, deck, finished basement—and dogs (because certain breeds may increase your rates). Based on the size, construction and interior finish of your home, it was insured for a certain amount, which is listed on your policy as either the Actual Cash Value or the Replacement Cost. Remember, that what you are insuring is the cost to repair or rebuild your home—and that does not include the value of the land. In other words, the value shown on your policy does not include the value of your lot.

Most insurance companies have a formula for increasing the amount of coverage every year, to keep pace with increases in the cost of materials and labor. So, if you’ve owned your home for a while, you’ve probably seen small annual increases in the covered amount, and most likely in your insurance premium. But, a formula that automatically increases the value of a home is not perfect. And, sometimes the coverage amount is overstated.

Ask for a home insurance policy review
Each insurer has a different approach to when and how they will review a home’s value, so ask your agent or call your insurance company. The time to do this is before your policy renews, so that the value can be re-assessed and your insurance premium can be adjusted before your bill arrives.

What you can expect is that either your agent or an underwriter at the company will ask you a series of questions about your home, in order to determine the current value for which it should be insured. Common questions include whether you’ve replaced any major items like a furnace or hot water tank, the condition of your appliances and flooring, and other items that have changed since you first insured your home. If this re-assessment shows that your home value was actually higher than it should have been, you can expect a rate adjustment at your next policy renewal.

What happens when market values drop?
If home values have declined in your area, you might expect your insurance bill to drop, too. Sadly, that’s not the case because what you’re insuring is the cost to repair your home—not to sell it. Since the basic costs of building materials and contractors’ labor rates are not going down, repair costs will continue to increase—and your insurance coverage needs to keep pace with those increases.

So, why would a home insurance adjustment ever help? Since insurance is designed to compensate you for the value of what you could lose, the cost to replace those things that depreciate over time might decrease from year to year. For example, while construction costs go up every year, the cost to replace your appliances or flooring will decrease as those items depreciate. Thus, the covered amount on your home insurance policy should increase very slowly each year—and that’s why we recommend that you double-check it.

Do a home inventory today
Ok—we know this never makes it to the top of the to-do list. But, seriously, if you spend one hour doing a video, taking digital pictures or even completing a handwritten list, it will pay off if you ever have a fire, flood damage or a theft. Once your inventory is complete, be sure to keep a copy at work or give one to a relative, so you can find it when you need it.

Compare rates and coverages every three years
Even if you don’t live in Florida or your rate hasn’t changed recently, it’s a good idea to ask another company for an insurance quote—and see what value they assign to your home, based on their questions. Every insurance company asks slightly different questions—and may provide you with a value that’s closer to your sense of the market value. And, you might find different deductibles or discounts that can help you save even more. If you decide to switch, you may want to change your car insurance, because many companies offer a multi-policy discount.

A home is often a person’s largest asset and protecting it properly can be complicated. The unexpected can threaten people’s homes or possessions and compromise them financially, making homeowners insurance an important consideration.

Insurance.com developed the following guidelines to ease the process of choosing the right insurance for new homebuyers.

First-time homebuyers may not realize that homeowners insurance covers more than just the structure of a house. It also protects the homeowner and generally anyone named on the policy, including a spouse, resident, household employee, guest or visitor. Most policies offer three kinds of protection:

1. Structures – A homeowners policy protects a person’s dwelling for damage due to common threats like fire and smoke, lightning, theft and extreme weather. Unless it is listed among a policy’s exclusions, anything that causes loss to a homeowner or his property is covered. To cover the exclusions, homeowners can often pay to add endorsements to their policy, although some exclusions, such as flood damage, may require the purchase of a separate policy.

* Coverage Amounts – When choosing coverage amounts, people should remember they are protecting the entire home, not simply the amount remaining on the mortgage or their equity in the building.

2. Personal Property – Family possessions and personal property also are covered by homeowners insurance. In most cases, a policyholder will be reimbursed for damage or theft of personal property, whether the loss occurs on the protected premises or elsewhere. Recalling each item in every room can be difficult, however, so policyholders are encouraged to make an inventory of their belongings – recording the serial numbers, as well as the dates and costs of purchases for possessions such as jewelry, artwork, furniture and appliances. Personal inventories should always be stored in a fireproof safe or away from the premises, such as on videotape or a computer that is not in the house.

* Coverage Amounts – Typically, the insurer sets the total value of possessions at half of what the home is insured for. But there are limits for certain items and the amount may not be sufficient to cover the replacement of property, so homeowners may want to purchase additional coverage for their possessions. Review of a homeowner’s personal inventory is the best way to determine whether his coverage is sufficient.

3. Liability – Homeowners insurance also provides compensation for liability claims and medical expenses, as well as other claims that result from property damage and personal injury suffered by others. This coverage applies whether an accident occurs on the policyholder’s property or while away from home.

* Coverage Amounts – The standard amount of liability coverage is $100,000 on a typical homeowners policy. If a homeowner feels that the standard amount may be insufficient, he should consult an insurance professional about the availability of a higher level of coverage.

After establishing a policy, homeowners should periodically review their existing coverage to make sure that it keeps pace with any major purchases or improvements they make to their homes. Securing the right insurance policy at the right price is an important step in the home buying process, so homebuyers should shop around for a policy that best suits their needs and protects their most valuable asset appropriately.

What is Home Insurance?
Required by most mortgage lenders, most standard home insurance policies will provide coverage for damage to your home (and many of the items in your home) caused by:

* Theft
* Fire and lightning
* Smoke
* Frozen pipes
* Ice and snow

Home insurance also covers injuries and property damage caused by you, your family (or pets) to other people. This liability coverage for will pay for medical payments to third parties, and legal costs if a lawsuit is brought against you. The insurance will also usually cover any living expenses you incur, if you’re unable to live in your house because of a fire or other covered incident.

What’s not covered?
Read your home insurance policy to find out exactly what is and is not covered. Typically, most insurers exclude damages caused by an act of war, nuclear accident, flood, earthquake, and terrorism, although you may be able to purchase special policies or endorsements that will cover these events. Also, any damage caused by wear-and-tear isn’t covered—this is considered maintenance, and is assumed to be the responsibility of the homeowners themselves.

How much is enough?
Mortgage lenders require that borrowers purchase a minimum amount of home insurance (typically equal to the appraised value or the purchase price of the home). But this is often not the amount of coverage you truly need. Instead, find out how much it would cost to rebuild your home, and consider insuring it for that amount. When you apply for a policy, your agent will help you establish the replacement cost by asking for detailed information about the construction and contents of your new home—and possibly by completing a home inspection.

The liability limits on a standard homeowners policy are typically $100,000, but this may not be enough to protect all of your assets. For an additional charge, you can increase this coverage to $500,000. You may also choose to buy an umbrella policy to add coverage in increments of $1 million. Generally, you would buy the umbrella policy from the same company that insures your cars.

You get what you pay for
Are you willing to pay more to have damaged personal property replaced? If so, consider purchasing replacement cost coverage with your home insurance. When it comes to valuing property, insurers generally use one of two methods. The first, actual cash value, pays you an amount equal to the replacement value of the property, minus depreciation for the years you owned the item. The second, replacement cost, is more expensive, but it pays you the full value of the item today, so that you can replace the old item with a new one.

Most home insurance policies limit coverage for certain high-priced or hard-to-replace items. Additional endorsements or floaters will be necessary to protect items like jewelry, furs, antiques, guns, and other valuables. You may need an appraisal for some items before the company will provide a rate.

How deep are your pockets?
To save money, consider choosing a deductible of $250, $500, or even $1,000. In the event of a loss (e.g., damage from a winter storm), you’ll be required to pay this amount out of your own pocket before your home insurance takes over, but in the meantime, this could reduce your homeowners premium.

Sound the alarm
Don’t forget to tell your insurer if you have a home security system (e.g., fire, burglar, emergency). Most insurers offer discounts for such safety features. You may also qualify for a lower insurance premium if you live near a fire department or hydrant, own a newer home, own a home built out of fire-resistant materials, or get your auto insurance from the same company.

Shop around
Get quotes from several insurance companies when shopping for home insurance. But remember, the lowest price does not always equal the best deal. Compare the coverage each policy offers, and check with your state’s department of insurance to make sure that each company you’re evaluating has a good reputation in the industry.

Have you ever thought that what will happen if your house gets into fire or some kind of a theft takes place in it? In such a scenario, you will not only take you through a emotional trauma but you will also have to pay a huge cost to get things done the way they were.

However, you can save the monetary loss that you will be going through can be dealt by some one else, if you get an insurance cover for your property at the right time. You will be paying a cost that will be almost negligible in front of the cost of your house but will help you save thousands of dollars if something happens to it.

The best way that one can protect his most precious possession is by taking up home insurance. Home insurance is basically a police that you take up by paying a certain amount to an insurance company, who in return will cover your home and its contents from any expected or unexpected calamities that may occur to your home.

Taking home insurance is a wise decision which will recover your costs in case of fire, theft, leakage and other fatal accidents that happen to occur.

The unfortunate part of any home insurance is that in case if your home has not suffered from any kind of damages, your money, which you have regularly paid to the insurance company, will not be given back. Hence, make sure that you have chosen a cheap home insurance deal. The best way to find such cheap and best home insurance companies is with the help of online search engines

HO-1 is one of the most important types. This basic policy protects the house against the damages caused by fire and lightening. Another feature of the policy is that it covers valuable items like jewelry.

HO-2 is a policy that offers broad coverage. The coverage offered by the policy includes damage from rain, smoke, wind, vandalism, hail, theft, removal of items and explosion.

HO-3 is a special form of policy that is called as ‘open peril’ or ‘all risk’ insurance. This policy covers the home against loss or damage. The exclusions that are listed in this policy must be read carefully so that you can be sure that the important items are not excluded.

HO-4 is known as a tenant’s insurance policy. This policy insures the personal items and contents against the situations mentioned in the HO-2 policy. Another attractive feature of the policy is that it covers the supplementary living expenses including the medical payments. It provides liability protection too.

HO-6 is a policy offering coverage for the condominium owner for covering the items that will not come under the coverage of condominium association policy.

HO-8 is normally referred as an ‘older home’ policy. If the house you own is an old one, most of the policies will not offer replacement coverage. This policy is to overcome that limitation.

Having a better understanding of these policies can help you in making the right decision regarding the home insurance policies.

Smart homeowners, maintain home insurance and those homeowners who have nothing to lose, do not.  I know that many think that home insurance is just an unnecessary additional expense and that what are the chances of anything happening to your home, but you have to cover all bases.  The truth is we cannot predict a fire, flood, or any other natural disaster, but for a few dollars more each month, you can guarantee yourself a piece of mind.  Most homeowners are not informed correctly, when purchasing home insurance, so they usually purchase whatever is the cheapest plan and unbelievably that plan does not cover very much.

There are many home insurance plans to choose from, you can select a plan; which covers simply the frame of the home and that means the wood, concrete, plaster and beams.  This type of plan; however, does not cover paint, carpet, tile, furniture, or any household items.  Therefore, in the end; with this plan you end up having to rebuild your house anyway.  The other plans available do cover household items; as well as personal items, it really depends on you and what you would consider the worst-case scenario.

If you are not sure which plan is the best option for you, seek advice from an insurance agent.  If you are worried about insurance agents; just trying to make a sell, instead of assist you honestly, then ask a friend or family member who has already been dealing with home insurance policies.  Information is also available through the internet and you have online agents who will answer any questions you may have.