Everything you need to know about insurance basics, like coverage types, limits, cost and more.
Questions to Ask Your Homeowners Insurance Agent
You’re a savvy shopper, but not understanding your homeowners insurance policy means you could be sacrificing important protections. To ensure your homeowners insurance coverage fits your needs, it’s a smart move to get answers to your homeowners insurance questions before you sign on the dotted line.
Connecting with a knowledgeable insurance agent means you’ll work with a trusted advisor who understands your specific needs. Your agent is your advocate — always available to help you protect what matters most and help you find the answers you need when it comes to coverage, claims and discounts. An experienced agent can help you assess your unique needs and risks, anticipate changes over time, and uncover coverage gaps, as well as potential discounts you may not have otherwise known about.
We’ve highlighted some key questions to ask your insurance agent to help you better understand your home insurance.
For most people, buying a home is one of the biggest investments you’ll ever make. Protecting it properly is essential for your family’s well-being and your financial health, so you don’t want to skimp on coverage. The good news for your wallet? Discounts on your homeowners insurance policy are available. Some of the best questions to ask your insurance agent are about potential discounts based on:
- Being a long-term customer or second-generation client.
- Bundling multiple insurance products, like auto and home.
- Having purchased your home in the last three years.
- Having smart devices, like Ring Video Doorbell or energy-saving thermostats.
- A security alarm system that protects your home.
- Recent large-scale renovations (plumbing, heating, etc.).
- Streamlining payments and going paperless.
- The age of your home.
Learn more about what it takes to qualify for each of these discounts. Connect with an American Family agent to see which savings you can immediately apply to your policy.
When you’re shopping for homeowners insurance, you’ll encounter different deductible options. The deductible is what you would pay out of pocket toward damage or loss before the insurance coverage pays for a claim.
Some deductibles are set at a specific dollar amount while others are based on a percentage of the insured value of your home or your personal property. Which is better for you?
Percentage-based deductibles. These deductibles are based on a percentage of the covered property’s insured value. If your home is insured for $200,000 and your deductible is 2 percent, you would pay the first $4,000 of any damages before a claim is paid. Because the deductible is based on your home’s value it will change over time.
Flat deductibles. This kind of deductible is a specific dollar amount that you must pay for any damages before a claim is paid. If you had a kitchen fire that resulted in $4,000 in damages and you had a flat deductible of $500, your insurance would cover $3,500 in damages. The deductible never changes unless you change it.
High deductibles. Choosing a high deductible means more money comes out of your pocket after a covered incident. But a higher deducible can lower your premium.
Maintaining a lower deductible means you’ll pay a higher premium, but may provide you with added peace of mind that you won’t be paying out too much of your own money in the event of a claim. Talk to your insurance agent to determine what short-term costs you can afford and how this affects the long-term cost of your premium. If you don’t have much in the way of rainy-day savings, you might set a lower deductible. But if you’re comfortable covering a large, one-time cost — ask about high deductible options.
Insurance and Property Loss
Dwelling coverage protects your home in the event it’s damaged or destroyed by a type of loss — such as fire, wind damage, theft or vandalism — that’s covered by your homeowners insurance policy. When you’re purchasing a policy, a good rule of thumb is to select a dwelling coverage limit that covers the replacement cost of your home.
Your home’s replacement cost is the amount of money it would take to rebuild your home. If your limit is too low, you’ll be underinsured and might not have enough money to rebuild your home if it’s totally destroyed.
The cost of rebuilding a home is different from its market value, so using the market value to set your limit of insurance may not give you enough protection. Connect with your insurance agent to make sure you’re insuring your home for its replacement value, rather than its market value.
Within your homeowners insurance policy, you’ll choose coverage for your personal property. This is so that, in the case of a loss, you’ll be able to replace all the things you own. It’s important to be aware of your coverage limits and replacement value to ensure you have adequate coverage. Before meeting with your agent, create a home inventory list to make sure you’re properly covered. This way, you’ll be able to determine an adequate coverage amount for all the things you work so hard for.
Use the following as a start for your inventory:
- Game systems
- Musical instruments and equipment
- Sound systems
- Sports equipment
Your policy provides limited coverage for the items below, but you can choose to broaden your level of coverage to further protect your more valuable assets:
- Flatware and tableware
- Jewelry, gemstones, watches and furs
- Money, banknotes and coins
- Rugs and tapestries
- Stamps, securities, passports and tickets
You can find a helpful home inventory form here. Or, keep track of items in your home using your smartphone or computer and store your reports in the cloud.
When construction costs rise, it can affect your homeowners insurance. If your coverage doesn’t increase as construction costs do, you may be underinsured if you suffer a large loss — leaving you liable for unexpected costs.
When Should I Speak with My Insurance Agent?
While you’ll generally review your coverage when it’s up for renewal, here are some other key instances when you should review your home insurance:
- You made major improvements to your property
- People in your family moved in or out of your home
- You decide to rent your home or a portion of your home
- You started or stopped a home-based business
Home Insurance Coverage Details
Your homeowners policy typically covers costs associated with damage from things like fire, windstorms, hail, lightning, theft and vandalism. It also covers temporary housing expenses if your home is uninhabitable while it is being repaired or rebuilt, and it offers liability coverage for medical and legal expenses if someone is injured on your property or as a result of your activities.
Typically, a homeowners policy doesn’t cover floods, sewer backup or sump pump overflow, mold, earthquakes, or termite infestation. However, there are additional coverages for purchase to help protect you from these instances.
For example, flood damage isn’t covered under your basic homeowners insurance policy, but it’s a good idea to protect your home with flood insurance no matter where you live. Flooding can happen even if you aren’t located near a river, lake or ocean. Some people with federally backed mortgages are required to get flood insurance if their home is in a high-risk zone. Talk to your agent about adding flood insurance through the National Flood Insurance Program.
Earthquake coverage is another optional add-on not included in a basic policy. It protects your home in the case of an earthquake.
Sewer back-up and sump pump overflow coverage is also a great optional coverage to have, especially if you have a finished basement. If your system ever fails or the power goes out, water overflow may occur and your basic homeowners policy won’t cover you for the damages to the structure of your home or the personal property in your basement.
Your insurance agent can help you better understand these extra coverages and why they’re so important to have.
Standard homeowners insurance policies may provide some coverage for home office property, but it may be limited. To ensure you’re properly protecting any business property you have, you can purchase additional coverage. Don’t forget to ask your agent if you need liability coverage for your home office or coverage for business items stored in a structure separate from the home, like a detached garage.
Liability insurance covers you for accidents for which you are found legally liable. For example, liability insurance can protect you from:
- Medical and legal expenses due to a guest sustaining injury on your property, like if they were to slip and fall, breaking their wrist.
- Medical and legal expenses due to a dog (or other pet) biting others.
- Damage to someone else’s property due to actions by you, your children or other household member, such as breaking a window with a baseball.
Vehicle-related damage will not be covered under your homeowners policy liability coverage — that’s what your car insurance is for! Your agent can help you determine what liability coverage and limits best fit your needs.
Umbrella insurance supplements your basic homeowners insurance policy liability coverage and helps protect you from large bodily injury liability and property damage liability claims. This type of coverage provides peace of mind that you’ll be covered in the case of a major accident or unforeseen event that would exhaust your regular liability limits and cause financial hardship.
Filing a Home Insurance Claim
When your home is damaged or destroyed, we’ll help you get things back to normal as quickly as possible. Having a comprehensive homeowners insurance policy and a strong relationship with an insurance agent you trust can make all the difference for your recovery. Understanding the claims process and knowing who to call when disaster strikes can help you get your life back on track.
If you’ve suffered a loss, you’ll need the following information when you go to file a claim:
- Your name, address and phone number
- Your policy number
- The date and time of your loss
- A brief description of what happened and what damage was sustained
- Insurance and contact information for anyone else involved
Need to file a claim? Choose from the following:
- Contact your agent.
- Call our 24x7 customer care center at 1-800-MYAMFAM (1-800-692-6326).
- Submit a claim online.
After your claim is filed, a claim representative will contact you to confirm the details and timeline of your claim. Your insurance company will review the claim and complete it as quickly as possible to get you the funds you need to repair, rebuild or replace what you’ve lost.
Have the Answers You Need? Start Comparing Home Insurance Rates.
Now that you have a better understanding about home insurance, you can start comparing your policy options and rates! Still have questions? Your American Family agent is happy to talk through what protection makes the most sense for you and your home.
Related Topics: At Home , Home Insurance