- The first step to buying homeowners insurance is estimating the value of your property. Homeowners insurance is also known as home and contents insurance, which means it will potentially pay for damage to the physical structure of your home as well as damage to your possessions inside it. If you just bought your home, you can use its appraised value, or the price you paid, as a starting point. If you own items with special value, such as collectibles, antiques or jewelry, you may need a new appraisal of their value that you can submit to your homeowners insurance provider as proof of ownership and value.
- Insurance companies sell homeowners insurance using a series of titles called HO-numbers. In general, higher HO-numbers signify more broad coverage that covers more causes of damage. Besides getting coverage for the most likely or damaging events, you'll need to set appropriate limits. Limits represent the maximum amount your insurance company will pay and should be based on your value estimates for your home and its contents. You can choose to set limits that cover cash value, meaning they will be enough to pay for a similar home and similar, used contents or replacement value, which offers enough to rebuild your home exactly as it was and furnish it with all new contents.
- Once you know what type of coverage you want, you're ready to compare rates from insurers. You can contact insurance companies directly or go through a broker, who will show you offers from several different companies at once. Brokers charge fees but can save you time and help you find the best deals. You should also contact the insurance companies that you already work with for life insurance or auto insurance, since many offer discounts for bundling different forms of coverage together. Finally, some companies offer discounts for items such as a security system or fire extinguishers. Ask about discounts to find the true cost of each policy.
- Before you make a final decision on home insurance, consider whether you also want to add hazard insurance, which is special insurance that covers a specific type of danger. For example, earthquakes and floods are not included in standard home insurance policies, but they still pose a very real threat in certain regions and neighborhoods. You don't need to buy hazard insurance from the same company that supplies your home insurance, but, once again, you may stand to save money by bundling coverage. If your location makes hazard insurance worthwhile, or if your mortgage lender requires it, factor in its cost as you compare rates and make your final decision.