When it comes to protecting your most valuable asset, having the right home insurance policy is the difference between financial stability and financial chaos. A personalized home insurance policy can provide financial security in the event of unexpected accidents, natural disasters prevalent to your region, or general property damage.
However, selecting the right policy requires careful consideration and understanding of the types of coverage options available to you. Asking the right questions of your independent insurance agent, you can ensure that your policy adequately meets your needs—and provides the protection you deserve.
At a glance:
- Understanding the scope of your home insurance coverage, including exclusions and limitations, is essential to ensuring you have adequate protection.
- Working with an insurance agent to customize your policy with appropriate coverage limits and additional endorsements can ensure you're adequately protected.
- Regularly reviewing your home insurance policy to ensure it aligns with your current needs, such as property value increases or renovations, is critical.
Understanding home insurance coverage: what’s included and what’s not
The first step in securing an appropriate level of home insurance coverage is by understanding the limitations, exclusions, inclusions, and add-ons available to you. Additional coverage, such as endorsements for floods or earthquakes, can be crucial if your region is prone to natural disasters. Discuss these options with your agent to determine what might be necessary for your situation.
There are four basic questions you can ask your insurance agent to get started understanding what home insurance covers—and what home insurance does not cover.
1. What does my current policy cover, and what exclusions should I be aware of?
By asking this question, you will gain clarity on the scope of your coverage, in particular concerning natural disaster coverage, personal belongings coverage limits, and even to help identify any unexpected coverage gaps your homeowners insurance policy (or prospective policy) may have.
2. Do I have sufficient dwelling coverage to rebuild my home in today's market?
Understanding the cost to rebuild your home in the event of a total loss is arguably the most valuable aspect of a homeowners insurance policy. What you paid for your house likely will be less than the current cost to rebuild. Posing this question to your insurance agent will help ensure that your coverage limits align with the current costs of construction and materials in your area, to fully rebuild your home, if necessary.
3. How does my policy handle additional structures on my property?
Does your home include any other structures on the property like a detached garage, shed, fence, swimming pool, ADU? More than likely, the answer is yes. This is why it's important to verify if other structures like garages and sheds are covered by your home insurance policy. It’s also critical that if they are covered, that homeowners understand any coverage limits to ensure all property aspects are protected.
It’s important to note that not all structures—like swimming pools—are covered by all home insurance policies. Be sure that if you are seeking coverage for this type of additional structure that your policy includes specific coverage.
4. Is there coverage for personal belongings both inside and outside my home?
Your personal belongings (along with your family) are what make a house a home. They are physical representations of your cherished memories and as such, should be protected from damage or loss.
Many home insurance policies include coverage for personal belongings both inside and outside the home. Be sure to ask if your policy includes coverage for those outside of the home.
It's also important to understand any coverage limits, as if you own high-value items, like jewelry, collectibles or artwork, your policy may not include enough coverage to replace or repair said items in the event of covered damage or loss.
Customizing your home insurance policy: tailor coverage to your needs
Once you have a firm grasp on what is and isn’t included in your home insurance policy, the next step is to tailor the policy to your unique circumstances and needs. Independent insurance agents are ideal at customizing coverage, as they often have knowledge of additional endorsements (or riders) or supplemental policies that may be integral to adequately protecting your home and belongings. For example, if you own high-value items like jewelry or artwork, your agent may recommend increasing your coverage limit to avoid out-of-pocket expenses in the event of loss or damage.
5. What optional coverages or endorsements would you recommend for my specific situation?
The best place to start is by asking for recommendations. Insurance agents are experts and can provide valuable guidance on coverage options that you may or may not be familiar with. Explore additional coverages with your agent to ensure complete protection, such as an umbrella policy or even flood insurance.
Not all additional coverages are available as an add-on to the base policy provided by your insurance carrier. Your insurance agent can help you to secure added protection for natural disasters like floods or earthquakes, that are typically excluded from standard home insurance policies.
6. Can I bundle my home insurance with other policies for a discount?
If you are looking to get the best bang for your buck, bundling your home insurance policy with, for instance, your auto insurance policy could potentially secure you a discount. These are known as multi-line discounts, and could lead to significant savings on your insurance premiums over time.
Discounts will vary depending on your insurance provider and the policies you choose to bundle. If you are choosing to work with an independent insurance agent, they have access to products offered by numerous carriers and are perfectly positioned to find you the policies (and discounts) that fit your budget.
7. How does my policy address liability coverage, and should I consider additional protection?
Liability coverage protects you financially if you are at fault for causing injury to someone who i s injured on your property, or whose belongings are damaged. This coverage is standard on most property and auto insurance policies. However, limits and exclusions differ based on your home insurance policy.
Evaluate whether or not your current liability limits are adequate, given any risks associated with your policy; these could include having a swimming pool or trampoline on your property, or even pets, such as specific dog breeds like Rottweilers or Dobermans. Some insurance policies specifically exclude certain dog breeds or swimming pools, so it's important to discuss liability coverage with your insurance agent. 
Navigating home insurance costs and claims: know your financial limits
Insurance is a uniquely intangible product that purchasers hope they never have to use. But, in the unfortunate event that you do need to adjust coverages or file a claim, it is important to have full understanding of any costs associated with your policy, as well as any financial limits it may be subject to.
8. What factors impact my home insurance premium, and how can I lower my costs?
As several factors can impact your home insurance premium, it’s critical you ask your insurance agent this question. Some of the most common factors include location, home value, and the age and condition of your home. Other factors include:
- Deductible—A higher deductible can lower your premium, but means you'll pay more out-of-pocket in the event of a covered claim.
- Coverage limits—Higher coverage limits generally result in higher premiums.
- Discounts—Some insurance companies offer discounts for installing security systems, customer loyalty, and the aforementioned bundling.
9. What is my deductible, and how does it affect my premium and claims process?
As mentioned, your home insurance deductible is the amount you're responsible for paying out-of-pocket before your insurance company covers the rest of a covered claim. Talk to your insurance agent about your budget, likelihood of a claim, and any cost-savings available to you.
10. How does the claims process work, and what should I expect if I need to file one?
Filing a home insurance claim can be stressful, but understanding the process can help alleviate some of the worry. Fortunately, your insurance agent is there to help you through the claims process for your specific insurance provider. However, there is a general process you should follow in the event you need to file a claim:
- Contact your insurance provider as soon as is safely possible. They will guide you through their process and what you can expect in terms of communication, timeline, and resolution processes.
- Take photos or videos of the damage. This will help the insurance adjuster assess the extent of the loss.
- If possible, take steps to prevent further damage, such as covering holes, turning off water sources, or securing loose items like outdoor furniture.
Planning for the future: keeping your home insurance policy up-to-date
Home insurance policies are dynamic documents and can adapt to your changing lifestyle and changes to your home. As such, regularly reviewing your home insurance policy with your insurance agent will ensure you maintain appropriate levels of coverage.
11. How often should I review and update my home insurance policy?
It's generally recommended that homeowners review their home insurance policy on an annual basis. This ensures that your coverage aligns with your current needs and protects you against potential risks, such as life changes, property improvements, and even underwriting changes.
Reviewing your policy annually will help you identify coverage gaps, take advantage of available discounts, and adjust coverage limits. If you experience a significant change in your life or property, it's a good idea to review your policy sooner rather than later. Ask your insurance agent to recommend a cadence that suits your lifestyle and needs.
12. What should I do if my home increases in value, or I make significant renovations?
If your home increases in value or you make significant renovations, it's important to update your home insurance policy. A higher home value likely means you will need more coverage to adequately protect your property and belongings. Talk to your insurance agent about your options and any expert guidance they can provide.
13. Can you help me understand the difference between actual cash value and replacement cost?
The type of home insurance coverage can significantly impact the amount you receive for a covered claim. Two of the most common options are actual cash value (ACV) and replacement cost.
ACV is the cost of replacing your damaged or lost property, minus depreciation. This means the amount you receive will be reduced based on the age and condition of the item. Replacement cost coverage pays the full cost of replacing damaged or lost property with new items of similar kind and quality, without deducting for depreciation.
Speak with your insurance agent about the pros and cons for each option and their recommendations.
Protecting your investment: the Openly advantage
Taking the time to understand your home insurance policy and asking the right questions can protect both your investment and your financial future. A well-crafted policy can provide peace of mind and financial protection for years to come.
To ensure you are adequately protected, partner with a trusted home insurance provider like Openly. Openly collaborates exclusively with independent insurance agents to deliver personalized, comprehensive home insurance solutions tailored to your needs. To explore whether Openly's high-value home insurance coverage is the right fit for your home and lifestyle, contact an independent insurance agent near you. If Openly is not available in your state, our independent agency partner can help you find an insurance solution that works best for you—no matter where you live in the U.S.
