Home Insurance 101: What You Need to Know About Coverage and Saving on Your Premium


So if your house is insured for $200,000, your belongings would generally be covered for up to $100,000. With a typical policy, you would get the cash value of lost items, minus any depreciation.

If you want to get the full replacement value, then you should choose that coverage. This will cost more, but will give you the full replacement value of your property, minus the deductible, she said.

If you have something that is irreplaceable, Hobson suggested that you keep it somewhere else – say, in a safe deposit box.

Remember, it's wise to keep an inventory of everything in your home so you can prove you had it if you need to file a claim. Take photos to catalogue everything in your home and keep a copy of those photos outside of your house.

Hobson said you should also keep a list of all the valuables that are in your home. The Insurance Information Institute (IIS) has free software at its website that can help you keep track of those items.

Click HERE to visit the institute's website.

Q: Are there ways that I can save on my premium?

A: Yes. You can increase your deductible in order to lower your premium, Hobson said.

The IIS estimates that people could lower their annual premium by 25 percent if they increase their deductible from $500 to $1,000.

Hobson also recommended that homeowners shop around. Quotes can vary widely, so talk to your agent about different kinds of policies, she added.

You can also find quotes online at insweb.com and at netquote.com. But you should remember that the cheapest quote may not be the best. Check out the insurance company's history with your friends, family, your insurance agent or your state's insurance commissioner's office.

Hobson pointed out that homeowners can get discounts just for making their homes safer. For example, people can get discounts of up to 5 percent for installing burglar alarms, smoke detectors or dead bolts, but they often have to ask for those discounts, she noted.

Some people could get as much at 15 to 20 percent off their policy if they install certain types of sophisticated alarm systems, but they should check with their insurers first to see which systems qualify.

One More Thing

When most people get a homeowner's policy, they think they're covered for just about everything. That's not true. They may often overlook the possibility that they may be sued by someone who gets hurt on their property.

Most homeowner's policies will cover you for up to $300,000, but people are often sued for far more, Hobson said.

Hobson said you might consider getting what's called umbrella liability insurance, which will cover you for an additional $1 million. That coverage costs between $150 and $300 a year, she added.

Web-Extra Tips

Here are some more of Mellody's tips:

Many insurers will offer a discount to people who are over 55. Ask your insurer if you qualify. You could save up to 10 percent on your policy.

More and more insurers are looking at your credit score to help determine your rates. Check your credit report to make sure there are no errors that could affect your rate.

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