There is therefore little doubt that home insurance is necessary. How much do you need? Enough. Enough to cover any liability you have for damages and injuries occurring in your home. You also need to have enough money to rebuild your house in the event of a natural disaster or accident. This is where things get tricky. It would be difficult if not impossible to have insurance coverage for every possible eventuality; it would cost an absolute fortune to start with. However it would be much more expensive to be the victim of a flood, and lose everything you have, including your home.

Nobody can really tell you what you should and shouldn’t pay or include in your home insurance. What we can do it point out some holes in your coverage you would like to fill in.

Home contents.

Sometimes the contents of your homes, the electronics, clothes, jewelry, cash, cars, speed boats, yachts, etc… cost more than the damages to the structure, roof or walls of a house. A key point to look out for in this setting is the limits on your home contents. For many insurances the combined limit on all the contents of your house is $1000. This is obviously not enough if you have any amount of valuable in your home.

Check out your existing home contents to see if you have enough cover. If you don’t, you are not paying enough for your home insurance.
Special hazards. It is impossible to cover for all possible risks. You need to prioritize. It is theoretically possible for a house on mount Fuji (Japan) to get flooded, just extremely unlikely, you are better forgetting about flooding and making sure you are covered for earthquake, you do live on the arch of fire, one of the most earthquake prone areas in the world. However if you live in New Orleans, mmm, you get my drift, right? Flooding maybe should be a little bit of a priority for you.

These are just a few of the concerns you must address when deciding if your home insurance is adequate or not.

If it is the first time you get home insurance or you have never spent any time or effort looking into your home insurance, you are in for a surprise. There are many savings you can make by just taking some simple steps.

But let’s start with the basics, we did say it was an article for newbies and dummies : 0p
Here are some basic facts that will help you understand how insurance companies work and why they work like that. Home insurance companies are in the business of paying for the damage caused by accidents and natural disasters. These accidents may or may not happen. These accidents are more likely to happen to some people than others. Home insurance companies love to insure low risk customer (not prone to accidents and natural disasters) they would rather not insure the high risk / expensive clients that are likely to cost them more than they pay. Obviously your job is to make yourself look as low risk as possible.

What makes you a high risk customer?

-    Where you live. Living in a high crime rate part of town will increase the risk of burglary and with that your premium.

-    Your habits. Smokers pay more insurance because they are more prone to home fires. Home insurance companies offset this increase in risk by upping the home insurance premium policy.

-    Your home safety. If you house is safe and is as burglar proof as possible, home insurance companies will acknowledge this by reducing your premium.

-    How often you make a claim. Customers who claim all the time for every little thing are expensive both in cash and time for home insurance companies. Home insurance companies will respond by either denying insurance coverage for you or increasing your premiums astronomically.

What can you do to counteract these high risk high risk factors. Here are a few examples:
1)    When buying or renting a house it is worth considering the crime rates and type of neighborhood it is, home insurance rates being the one of the least important reasons to do so.
2)    Stop smoking. Again the reduction in home insurance premiums is the least important reason why.
3)    Increase your home safety. You can do this any number of ways: Install a home security and alarm system. Install dead bolt locks that will minimize the chances of accidentally leaving your door open. Both these security measures have ulterior benefits like the safety of your family.
4)    Deductibles on your home insurance mean that the customer, i.e. you, will pay for a variable initial amount. For instance, if you agree to a $500 deductible you will be responsible for the initial $500 of any claim. This is probably the most effective way of reducing your insurance premium.

Try deductibles they are great to reduce you home insurance premiums.

Deductibles are a feature insurance companies introduced to share the risk of accidents with customers. The idea is that customers agree to pay for the first $xxx in an insurance claim. Lets illustrate: say you have your windows insured and your adorable son breaks one with his new baseball. You can claim your house insurance and get it fixed. Every little claim drains the home insurance company’s resources and is a huge pain in the rear. These small claims are often not worth it for us, the customers. Just in filling the forms, calling the insurance company, taking a morning off to receive the adjuster and workers… With a deductible of say $300 you pay for the first $300 dollars of every claim so it won’t be worth your trouble to claim for small stuff. This will reduce your insurance premiums significantly.

Improve your credit score. This is not just a good idea for loans and mortgages, home insurances look at your credit rating to assess if you are a high risk customer or not. Prove to them you are a desirable customer with a low credit rating and see the premiums drop.

Shop around. Don’t stick with your grandparents home insurance just because you are emotionally linked to them, they aren’t. Shop around like you shop for home loans, clothes or cars. Home insurance is expensive you need to get the best deal you can. Even if you are happy with your current home insurance shop around every year to see if you can improve your policy. If you find a better  home insurance policy tell your company and they will likely match it or improve it.

Stop smoking. Not only will you live longer you will have more money to spend and enjoy the extra years you get. The highest cause of fire (one of the biggest expenditures for insurance companies) are unattended fags (Brit for cigarettes). If you used to smoke and have currently stopped, tell your insurance company you will be happy with your savings.

Install an anti-burglar system.

Home insurance love it when you get involved in your own protection. They see it as a sign of a responsible and low risk client. Some insurance companies might even help with the costs and they will all reduce your home insurance policy premiums.

This is especially important with risks that are not covered by typical multi-peril insurance packages, flood insurance being one of them. You can’t contract every home insurance coverage out there or you could buy a new house just with the yearly insurance fee. So some smart choices are needed to assess your risk and protect your investment.

This article will focus on the pros and cons of a rather important home insurance coverage, flood insurance. Floods can completely destroy your home, it’s contents and make it unlivable for long periods of time. As we mentioned above it is not included in most home insurance packages so you have to make the choice of including it in your home insurance coverage or not.

The Good.

The good thing about having flood insurance is that you have protection against one of the nastiest things that can happen to your home. When Mitch hit the Caribbean, Central America and surrounding areas the damages were often absolute, homes and contents completely destroyed. There are few more distressing things than having everything you own destroyed in a minute and not have the cash to replace it. My wife suffered that experience when living in the Dominican Republic and lost everything  she had, unfortunately she had no flood insurance.

The bad.

Flood insurance is very expensive. For a business for example that is worth under 500,000 dollars it will probably mean $3,000 per month, for larger business it can easily climb to $7,000. This is why most individuals and business waive flood insurance coverage unless they feel their house or business being flooded is a real risk.

The ugly.

Many people that don’t get flood insurance because they feel they aren’t at risk suffer the dire consequences of flooding. The saying a house built on a hill doesn’t get flooded is not so adequate in our current global warming climate where more and more previously safe areas are being affected. To illustrate this 25% of flood victims live in an area that was not categorized as a flood prone area.

The best thing you can do if you are re-assessing your home insurance and are thinking about flood insurance is to contact your insurance agent and get some advice from him. Then take the coverage he suggests you get (they are very prone to encourage you to spend more) and see if you can get a better home insurance deal elsewhere.

In insurance like in many facets of life, there is not a right or wrong way of doing things. There is however a right and wrong way for you to do things depending on your likes, dislikes, interests and goals. Home insurance is an interesting product to purchase. Have you ever stopped to think what home insurance, or any kind of insurance for that matter, actually is? When you buy an insurance policy you are buying partial protection in case something goes wrong. In other words you are spending some money in case an accident, emergency or theft occurs in the future.

What a bizarre form of gambling with the future. However, as bizarre as it might seem if we detach ourselves from the situation, home insurance and many other kinds of insurance for the world we live in. Why is that? Well most of us don’t own our homes outright. If a disaster occurs and your home gets flooded, where are you going to live? You will still have to pay for your mortgage, find an alternative place to stay and pay for the damages to the house. If you have the appropriate home insurance you will save yourself all this trouble and stress.

The question is: How much insurance is enough insurance? As we said above it depends on you. However here are the basic features home insurances cover. This might help you think what cover you personally need.

The Structure

By the structure we mean the actual bricks and mortar, columns, foundation, roof and other basic components. Most home insurances will cover for damages caused by winds, floods, fire and other natural disasters. It is worth thinking what kind of disasters can affect your house. For instance if you live in Japan earthquake cover would be a good idea, not so important if you live in New York. If you already have home insurance check it covers for floods and other disasters that might conceivably affect your area.

The contents.

Most home insurances will cover the contents of your home to a certain level. Electronics, furniture all tend to be covered by basic home insurance policies. However if you have a specific item of value, say a diamond ring an antique piece of furniture you might want to insure it separately or get a floater on it attached to your current home insurance.

Emergency lodging.

This cover provides alternative lodging for when your house is damaged or being repaired. When damages are extensive the cost of renting a house or getting a room in a hotel can add up quickly.

In a nutshell

So what questions do you need to ask yourself when considering if your insurance coverage is suitable?

1) What do you treasure most in your home?

2) What natural disasters and other threats is your home really threatened by? No point in having insurance for non-threats, and although it is impossible to be certain about everything you can insure your home for every eventuality.

3) Insure your valuable independently to assure sufficient cover on expensive items.

There are two ways to make business.

1) By creating a portfolio of faithful customers that will come back to you again and again no matter what, thanks to your individual and loving attention.

2) By providing an ok service at great prices.

You can see these two different business cultures represented in boutique shops as opposed to Wal-mart style multinational stores. Maybe you are a romantic and like to support the boutique style businesses that you feel offers a better service even if it is a little pricier. This is a valid view. The question is does it apply to home insurances?

Is it best to go for the small insurance broker that provides a personalized service? Or should you go online and get the best price you can by searching for home insurance quotes? Some people scare away from online service providers of home insurance, home loans and auto loans. They might accept intellectually that you can get better prices online but they feel there must be a trade 0ff and they prefer their traditional downtown office operations. How can you compare home insurances to get an educated opinion on the various options and which is best? How can you save on your home insurance?

Traditional vs Online

Is there really a difference when referring to home insurance. Home insurance is home insurance isn’t it. If it provides coverage and the company has the resources to back it, you are good right? The truth is that providing traditional office is expensive and the home insurance really doesn’t get better by spending more money to provide it.

The benefit of traditional one on one, downtown office broker is that you could get a great idea of what your policy is all about. If you are the kind of person who does not enjoy doing your own research and is happy to take your broker’s word for it, there might be benefits from a face to face service with someone you trust. However most serious insurance providers now have an online branch that provides one on one telephone and online advice 24 x 7 and still pass on to you the online business savings.

Compare and save.

Going online and comparing home insurance policies is so quick and easy you can literally scan hundreds of insurance policies in seconds and then spend as long as you want checking and re-checking the policies that catch your eye. If you have a doubt you can then phone in and ask an expert. By comparing so many insurances your chances of getting a good deal multiply. Even though it is nicer for many people to deal with a real person, especially if your technical literacy is limited, it is unlikely that the broker represents even a fraction of the insurance companies you can deal with online.

You can save money on home insurance by taking three basic steps: 1) Decide what home insurance coverage you need. 2) Compare thousands of policies with that coverage online and 3) Shop online to take advantage of the online price.

Choosing your home insurance policy can be the most important decision you make related to your home. Choose well and you are protected from the most likely disasters that can hit your home. Choose badly and your home and property could be wiped away. Having suitable home insurance is not just a matter of protecting what you have from damage but protecting you and your home from civil or criminal lawsuits by people who are hurt in your property or by your our your pets actions.

Home insurance is a package policy. It combines both protection to damage to your property and for any liability you are accountable for. Getting insurance for legal liability is vital as you can lose everything you own from a stupid liability settlement. Be smart and provide your home with the insurance it deserves.

Most disasters are covered by home insurance, however many policies do not cover earthquakes and floods. Lack of maintenance related disasters are the responsibility of the owner. If you feel you need insurance for floods, earthuake and so on you will need to buy an extra policy for earthquakes and one for floods.

Home insurance policies cover four main aspects of your home:

- Structural damage to the structure of your property. This will cover any damage caused by events included in your insurance policy. For example structural damage caused by an act of terrorism will not be covered.

- Personal property. Any electrical goods, furniture or even cash(to a certain limit) can be covered by the personal property house insurance. However this coverage has it’s limits and will not cover very expensive possessions like jewelry and antiques might not be insured. This will mean you will have to contract extra insurance to protect your investment.

- Liability protection. One of the consequences of living in a blame culture, where there is always someone to blame and make pay is that insurance must cover all walks of life and security. This will cover any damage your pets cause or damages to other ’s property due to your mistake or negligence.

- Additional living expenses if you are left without a house or are forced to incur in extra money while waiting to replace the things lost.

There is a vast variety of house insurance types. In the states these insurance types are described as HO-1, HO-2, etc… HO-1 being the most basic bare bones version that has been outlawed in many states. This insurance only covers the first 10 natural disasters.

HO-3 is the most popular providing insurance for all disasters except those specifically excluded. It is your job to risk assess your situation as home owners and how much you can afford not to insure your home.

Even if you have an older home you can get a HO-8 insurance policy that will protect you from most eventualities in homes and especially old homes.

What is your most precious possession? Depending on your definition of possession you might have answered your family, your wife, your children, your house, your car or your motorbike. Protecting what you treasure is part of human instinct. We don’t need to tell you to take care of your family but you might be failing to protect your most precious material asset, your home.

But I have insurance I hear you complain. Is your insurance suitable? Do you understand what it covers and what it doesn’t? What are your deductibles and your coverage limits? Understanding these and other factors of your insurance can mean the difference between a bad day and a financial ruin. If you have suitable insurance you can bounce right back from an unforeseen occurrence that affects your home, without it you could end destitute and with a massive mortgage to pay and nothing to show for it.

So what does your home insurance likely cover? And what doesn’t it?

1) Damage to your home by fire, lightning, theft, water and snow. These are the basics but can vary depending on where you live and your personal choice. In Nicaragua for example insurance often covers for earthquakes, volcanoes and hurricanes, but there is little need for coverage for damage from snow. Don’t assume your insurance is coverage for your area. Often “basic” insurance templates are sold with little attention to the personal needs of the policy holder.

In most insurances there is no coverage for earthquakes, acts of war and terrorism and floods. If you feel you might be at risk from these or other disasters plan ahead and get them included in your home insurance policy.

2) Your home insurance will likely cover damage and loss of your home contents, like furniture, electrical goods, etc… Please note that it will not cover luxury items or high cost goods like diamond rings, sport cars or property from your work or belonging to some0ne else. If you own expensive goods that stay in your house it is worth getting specific insurance for these items. These specific insurance policies are called floaters and are add-ons to your main house insurance.

3) You are also liable for any damage incurred by people while in your house. Even thieves that enter your property are able to sue you for negligence so it is worth making sure you are insured for injury liability. However even though most house insurance policies include some injury liability coverage it is rarely enough. If you feel that this or any other aspect of your insurance needs a special boost don’t think twice and get an umbrella insurance to raise your insurance limits.

Buying a home is such an outstanding purchase for most of us that it will often take us up to thirty years to pay. It is strange but when you start spending that kind of money it can begin to lose it’s value. We can easily start saying, well what the heck! Spending a little more won’t make a difference. Bank managers and salespeople know this. Which is why they try to sell you all kinds of insurance products at the time of purchase. When I bought my first house the manager pretty much told me that if I didn’t take on this life insurance he was selling me he wouldn’t approve my mortgage. I was twenty one, only six months in my current job and with no credit history, so I bought the life insurance, got my mortgage approved and cancelled the insurance a month later.

Banks and finance advisers will sell you no end of insurance products, mortgage insurance, life insurance, medical insurance and of course home insurance. How can you know what to buy and how much to spend on insurance? It is a safe choice to spend a substantial amount on house insurance. It is after all your largest asset you need to protect it. The only problem is that home insurance is very expensive, how can you make substantial savings on your home insurance. A great way of reducing the premium on your home insurance is taking on well chosen deductibles on your home insurance.

What are home insurance deductibles? As you probably guessed, deductibles deduct a certain amount off any home insurance. This is how they work. When you agree to have a deductible on a certain coverage you agree to pay the firs xyz dollars of any claim. For example if your house gets burnt down and you have a thousand dollar deductible, you will pay for the first 1,000 dollars in damages. Deductibles are very popular with insurance companies for two good reasons. One, when clients have to pay the first xyz amount on a claim it is very good incentive to not bother presenting the claim to start with. Two, the insurance company has to actually spend less on you as a client than if you didn’t have the deductible. For this reason insurance companies are happy to provide savings if you agree to medium to high deductibles.

The key to smart investment in home insurance deductibles is to get them in areas of coverage that are already somewhat covered by another insurance or protection. Often we have insurances we don’t even think about, like those inclued in credit cards, auto loans and umbrella insurances. Umbrella insurances provide coverage for when the coverage of the insurance company is not sufficient. If you are already covered in a certain area of coverage you can choose a very high deductible that will bring down your house insurance premium.

Knowing how much you should spend protecting your assets when you might never have to use the insurance is an interesting question. Obviously you should get as much insurance as you can afford, but when does it start getting ridiculous. For instance would it make sense paying a 500$ a year on the insurance of a car that is worth 1000$? Probably not. The same applies to homes, you want to have enough cover so that you don’t face insurmountable losses in the case of an accident but you don’t want it to be your main expense. This article will cover the main areas a good home insurance should include and some practical help on how to decide how much to spend.

A good home insurance should cover these four basic points:

a) The structural components of the building.

b) Your personal belongings, furniture, jewls, electronics and other hardware in the house.

c) The living expenses and miscellaneous bills that need to be paid after a serious home accident.

d) Your liability to others.

Let’s have a look at these factors seperately.

The structural components of the building. Good home insurance will allow you to at least rebuild your home in case it is destroyed by some accident or natural disaster. This part of the coverage must be substantial as the costs of rebuilding after extensive damage can be very high.

Have a good look at the cover your insurance provides under so called acts of God. This and other loopholes help insurance companies to try and wriggle out of the responsibility of honoring an insurance policy.

Your personal belongings. If you suffer an accident or natural disaster you don’t want the loss of your personal belongings to be added to the list of things you loose. Especially if you have expensive equipment, jewels or art work you must make sure you have sufficient cover for the assets you store in your home.

Living expenses in case of an accident that would not allow you to stay at home.

It is important to make sure you will have enough to pay for a hotel, good medical care and all the necessary cash and equipment to get you by after you file an insurance claim.

Your liability to others. This is probably the most important section of your home insurance. If you don’t have any insurance for damages you suffer, probably the worst thing that can happen is that you lose everything but liability to others could send you to bankruptcy faster than you could say Jack Robinson.

Be smart, before you choose your car insurance, think about your circumstances, the risks you take and the price of the goods you wish to protect. Remember that time spent planning and thinking now could save your life in the future. Knowing how much you really need will help you avoid stress and wasted time in the future.