Homeowners Insurance

Home insurance usually boils down to two crucial concerns -- protection and price. Although regulated at the state level, home insurance is more of a national product than is auto insurance, meaning you will find fewer local variations. More than half the business is written by the 10 largest carriers.

The proper home insurance coverage consists of getting the right type of policy, having the proper levels of protection within that policy -- including special provisions for jewelry and your computer stuff and the like -- and supplementing this coverage with special protection against natural disasters that ARE NOT COVERED in your basic policy.

Homeowners with mortgages are required by their lenders to have home insurance. Many people may think that the policy terms required by their lenders represent "OK" levels of insurance but this may not be true. Lenders want to make sure their exposure is covered but that can happen without you being fully protected. So it's important that you determine your needs as well and make sure they are reflected in your coverage.

Six Basic Policies

There are six basic kinds of home insurance policies and they're pretty much the same regardless of where you live (except for Texas). They tend to be defined by the perils they cover.

Serious Loss

In most cases, you want to insure your dwelling and its contents for their replacement values, which will likely differ from the dwelling's market value and your personal property's depreciated cash value.

Jewelry

Standard policies may not come near covering the replacement costs of even moderate amounts of home electronics hardware or expensive possessions.

Deductibles

The differences in annual premiums between policies with deductibles of $250 (you pay the first $250 of damage, the insurer pays the rest), $500 and $1,000 may easily be worth 20 to 30 percent of the annual premium.

Liability

The standard level of liability protection in homeowners' policies has been $100,000 but it's rising all the time (surprise!). Today, $300,000 is not an uncommon amount, and even higher levels are recommended for affluent homeowners with lots of assets to protect.

Other

Homeowners policies regularly provide other types of coverage, including off-premises theft protection and unauthorized use of your credit cards.