Buying home insurance: how to customize your coverage

When you’re shopping for home insurance, your licensed insurance broker will walk you through the process and help you understand the ins and outs of the coverage available to you. But before you have that conversation, we’ve got five tips to help you make sure you get the right coverage right off the bat.

1. Get enough coverage for your valuables. Most home insurance policies outline specific limits for different kinds of specialty valuables (like jewelry, sports memorabilia, collector comic books, computer software, artwork, and bicycles), and you might be surprised to find out how quickly your belongings can add up to exceed these limits. If your belongings in any given coverage category add up to an amount that goes beyond the limit, it’s best to purchase extra coverage to make sure you have the protection you need. Take stock of your higher-value items and be prepared to list them individually on your home insurance policy. Your broker can let you know if you need to have any of your items appraised by a pro beforehand.
   
   Bonus tip: If you add to your special collections throughout the year (when you receive a valuable Christmas gift, for example), don’t forget to contact your broker and add new items to your policy right away.
2. Have your antiques appraised and ask about Actual Cash Value coverage. Many home insurance policies are set up to pay claims on a replacement cost basis, meaning the amount you’ll be paid is equal to the cost you’d need to replace that item with a new, similar product of like kind and quality. While this will make sense for the majority of items in your home, it would be awfully disappointing if the amount you were offered for your hundred-year-old grandfather clock was equivalent to the cost of a new clock. Learn the difference between actual cash value and replacement cost and make sure you ask about actual cash value coverage for your antiques.
3. Make sure students living away from home are covered. Some home insurance policies are designed to protect kids who are living away from home while attending college or university, but others aren’t. If you have kids who are away at school, be sure to ask your broker if your new home insurance policy will extend to your kids — and if it won’t, consider getting them their own tenant insurance to make sure they’re protected while away at school.
4. Choose the right third-party liability limit. Third-party liability coverage is designed to protect you if you’re responsible for an injury or damage to someone else’s property. It’s set up to cover things like legal fees, money you have to pay to settle a lawsuit, and other related expenses — up to the limit in your policy, of course. Most home insurance companies require you to have a liability limit of at least $1 million. While this may be enough to cover most liability claims, many claims exceed $1 million, so it’s a good idea to consider increasing your limit. This is especially important if there’s anything on your property that could increase the chances of someone getting hurt (a swimming pool, a swing set, or pets, for example). Ask your broker how much it will cost to increase your liability limit — it may cost less than you think!
5. Ask about sewer back-up and overland water coverage. Most home insurance policies cover water damage caused by things inside of your home (like a burst pipe or a popped waterbed), but damage caused by water that enters your home from external sources (during a heavy rainfall, a sewer backup, or a sump pump failure, for example) is likely not covered by your standard policy. Ask your broker if you’re eligible for sewer back-up and overland water coverage and consider adding them to your policy to avoid a shock in the event of a water-related mishap.

If you already have home insurance but didn’t consider some of the coverages mentioned above when you bought your policy, talk to your broker about making some updates. If you’re shopping for home insurance and you’re interested in getting in touch with a new broker, find one near you today.

Know someone who’s shopping for home insurance? Share these tips on Facebook or Twitter.