Questions to Ask Your Agent About Home Insurance

It's a great idea to make a list of questions before your appointment with an insurance agent. Here are some questions to help you get started:

1) Are any discounts available? As an incentive to make your home safer, some home insurers offer discounts if you disaster-proof your home (such as by adding storm shutters), choose energy-efficient appliances and home electrical systems, update your roof, or get a security system. Some insurance companies may also offer discounts if you purchase another insurance policy with that company. Even if buying a package doesn't reduce your cost of insurance, it could lead to better insurance rates, or lower car insurance premiums, etc.

2) What exclusions are in the policy? Not all home insurance policies cover everything, and there are some events that aren't covered by any insurance policy. Your agent should make it very clear what will be excluded from the policy; once something is excluded, you will be fully responsible for paying in the event that the excluded event occurs.

3) Does the policy include total replacement coverage or actual cash value? As a homeowner, it is better if your policy includes total replacement value, because this is what it will cost to replace and/or repair your home. But some insurance companies only offer actual cash value, which takes depreciation into account and may be lower than the replacement cost value, resulting in further financial loss. In this case, you should ask about the recoverable depreciation clause.

4) Is loss-of-use coverage included? Loss of use covers your living expenses in the event that your home becomes uninhabitable. If you can't live in your home, you will need to stay elsewhere until your home has been repaired; insurance companies that include loss of use cover the cost of these living expenses.

5) What is involved in the claims process? When your home experiences damage of some kind, you must file a report called a claim if you want the insurance company to help with the cost of repairs. Before your policy will pay for the loss on the claim, you will have to pay the deductible. Ask your insurance agent how long it usually takes to send out an adjuster for a claim, and what happens if the adjuster disagrees with you about how much the damage will cost to fix. You may also want to ask about how claims will affect your premium.