A home is often a person’s largest asset and protecting it properly can be complicated. The unexpected can threaten your home or possessions and compromise you financially, making homeowners insurance an important consideration.

Farm Bureau Insurance developed the following guidelines to ease the process of choosing the right insurance for new homebuyers.

As a first-time homebuyer you may not realize that homeowners insurance covers more than just the structure of a house. It also protects the homeowner and generally anyone named on the policy, including a spouse, resident, household employee, guest or visitor. Most policies offer three kinds of protection:

1. Structures – A homeowners policy protects a person’s dwelling for damage due to common threats like fire and smoke, lightning, theft and extreme weather. Under “Special Perils” unless it is listed among a policy’s exclusions, anything that causes loss to a homeowner or his property is covered. To cover the exclusions, homeowners can often pay to add endorsements to their policy, although some exclusions, such as flood damage, may require the purchase of a separate policy.

• Coverage Amounts – When choosing coverage amounts, people should remember they are protecting the entire home, not simply the amount remaining on the mortgage or their equity in the building. This is especially important in today’s market with so many homes selling for much less than they would cost to build them.

2. Personal Property – Family possessions and personal property also are covered by homeowners insurance. In most cases, a policyholder will be reimbursed for damage or theft of personal property, whether the loss occurs on the protected premises or elsewhere. Recalling each item in every room can be difficult, however, so policyholders are encouraged to make an inventory of their belongings – recording the serial numbers, as well as the dates and costs of purchases for possessions such as jewelry, artwork, furniture and appliances. Personal inventories should always be stored in a fireproof safe or away from the premises, such as on videotape or a computer that is not in the house. Your agent’s office may be a great place as well.

• Coverage Amounts – Typically, the insurer sets the total value of possessions at half of what the home is insured for, some use 70%. But there are limits for certain items and the amount may not be sufficient to cover the replacement of property, so homeowners may want to purchase additional coverage for their possessions. Review of a homeowner’s personal inventory is the best way to determine whether his coverage is sufficient.

3. Liability – Homeowners insurance also provides compensation for liability claims and medical expenses, as well as other claims that result from property damage and personal injury suffered by others. This coverage applies whether an accident occurs on the policyholder’s property or while away from home.

• Coverage Amounts – The standard amount of liability coverage is $300,000 on a typical homeowners policy. If a homeowner feels that the standard amount may be insufficient, he should consult an insurance professional about the availability of a higher level of coverage.

After establishing a policy, homeowners should periodically review their existing coverage to make sure that it keeps pace with any major purchases or improvements they make to their homes. Securing the right insurance policy at the right price is an important step in the home buying process, so homebuyers should shop around for a policy that best suits their needs and protects their most valuable asset appropriately.

Homeowners insurance
If you have a mortgage, your lender probably required you to obtain some level
of homeowners insurance coverage. However, you’ll want to make sure that the
amount of coverage that you have will adequately protect you for all possible
losses. Homeowners policies set coverage limits for specific items (e.g., jewelry),
so you may want to look into purchasing a separate endorsement or a floater
if you feel that you need to increase your coverage. You also need to know if
you have “replacement cost” coverage on your personal property and
if you are covered for earthquake damage.

Flood insurance

Homeowners insurance does not provide coverage for flood damage. But those
living on a riverbank or near the ocean are not the only ones who warrant flood
protection. Even if you live in a low-lying area (e.g., near a creek), you may
want to look into purchasing flood insurance. Most companies that sell homeowners
insurance also sell flood insurance, so try contacting your own insurance company for more information.

Auto insurance

If you think that there is no connection between buying a home and auto insurance,
think again. If you’re ever in an auto accident that is the result of your negligence,
all of your assets (including your home) could be subject to liability claims
if the claims exceed the liability limits of your auto insurance policy. So,
you should re-evaluate the existing liability limits on your auto insurance
policy to make sure that you have adequate coverage to protect your home. If
you feel that you need even more coverage, you may want to look into purchasing
a separate umbrella liability policy, which would pay for damages that exceed
the coverage limits on your auto and/or homeowners insurance policy.

Disability insurance

Would you be able to make your monthly mortgage payments if you were unable
to work due to an accident or illness? A disability insurance policy will pay
you a monthly benefit to replace a portion of your income until you are able
to work again. Many employers provide disability insurance for their employees.
If your employer does not offer disability insurance or if you are self-employed,
you can purchase an individual disability policy.

Life insurance

What if you were to die before your mortgage was paid off? Would your family
be able to keep up with the remaining mortgage payments? Life insurance can
provide your family with the funds to pay off their debts, as well as replace
a portion of your income. While many employers offer some level of life insurance
coverage to their employees, this amount of coverage may not be enough to provide
financial security to your family. So, you may want to consult an insurance
professional to help you assess your family’s life insurance needs.

Contact me at (231) 744-9099 or www.muskegonhomeownersinsurance.com