3 Questions to Ask Before Purchasing Home Insurance

Homeowners don't want to be left with too little insurance.

Having the right amount of homeowners insurance is important. Property owners need to make sure they are fully protecting their assets against losses -- especially since chances are good their house is their largest asset and the place that they keep all of their possessions.

The best way for property owners to make sure they have the coverage they need is to ask a few key questions before buying a homeowners insurance policy. Specifically, there are three things every homeowner needs to find out the answers to in order to make certain they are fully protected.

1. How much personal property do they have?

Homeowners insurance doesn't just cover the physical house itself. It can also cover a homeowner's possessions. In fact, it provides coverage for personal items if something happens to them inside the house and if something happens elsewhere.

This coverage comes in the form of personal property protection. It will pay to replace a homeowner's furniture, electronics, and other possessions if the house burns down or another covered event occurs and those items are lost. If a homeowner has expensive electronics stolen while out of the house, home insurance can also cover this type of loss.

Homeowners need to know how much their personal property is worth to make sure the limits on their coverage are large enough to replace everything they own. While insurers often set the policy limits at a percentage of the insured value of the home, this may not always be enough.

The best way for homeowners to make sure their property is protected is to make a home inventory list. This takes time, but it's worth doing because if a property owner must make a claim, an insurer will want to see this inventory anyway.

2. Is the house in a flood zone?

Standard homeowners policies typically exclude coverage for flood damage. As a result, if a property is located in an area where it could flood, it's important to have standalone coverage.

Most lenders will require this, but property owners should buy it even if they pay cash for a home. Otherwise, they could find themselves without any protection from rising waters that damage their home or property.

3. How much liability insurance protection is required?

Finally, homeowners insurance pays out money to injured victims if they are hurt while visiting the insured property or otherwise injured in a way that the homeowner is responsible for. If someone slips on the steps and breaks an ankle or is bit by a property owner's dog and needs stitches, liability protection pays for the victim's damages that the homeowner is legally responsible for covering.

It's important for property owners to have enough liability protection to ensure that their assets are not at risk. If coverage limits are too low and a victim sustains lots of damages, the property owner could otherwise get stuck covering their losses out of their own pocket. This could lead to wage garnishment, liens on property, and tens of thousands of dollars in financial loss.

The bottom line is, home insurance provides really important protection. Homeowners must make sure they have enough coverage so the insurer protects them against losses that could otherwise lead to financial devastation.