A Basic Guide to Home Insurance: What You Need to Know

A Basic Guide to Home Insurance: What You Need to Know

Anas Bouargane 04/06/2020 6
A Basic Guide to Home Insurance: What You Need to Know

Your home is not just a place to stay; it is possibly the most valuable asset that you own.

Taking an insurance cover to protect your home is vital to ensure your peace of mind. After all, you may not be able to replace your home easily in case of any disaster.

What is Home Insurance, and What does it Cover?

Home insurance or homeowners insurance is insurance meant to cover your home and its contents in case of damage or destruction. Standard home insurance policies also cover any personal liability that you may face because of being a homeowner. Broadly the coverage you get is:

- Coverage for any damage to your house or permanent structures that you may have on your property.

- Damage to your contents due to specific causes mentioned in the insurance policy.

- Coverage for any personal liability issues arising due to you being a homeowner.

- Coverage for costs that you may incur because of a specified loss (for example, you may need to live somewhere else in case your home becomes uninhabitable due to a fire).

How should you look for the right home insurance policy?

1. Evaluate Insurers

Before buying home insurance, you must select a creditworthy and legitimate insurance provider. You can find the rating for all home insurance companies licensed in your state by going to the website of your state's department of insurance. Use this as a starting point while evaluating different home insurance providers.

2. Do a Health Check of the Insurance Providers

Websites of top credit agencies (such as Standard & Poor's, Moody's, and A.M. Best) have scores that will help you rate home insurance companies. Such sites also help you get an idea of claims processing, general customer feedback, and customer complaints.

3. Try to Get Multiple Quotes

Rather than depending upon a single insurance provider, it is essential to get quotes from multiple providers. Quotes from at least three different providers will give you a ballpark figure and help you negotiate. An online insurance aggregator such as PolicyScout.com can help you get quotes from multiple insurance providers with minimum fuss.

4. Find out How Satisfied Existing Policyholders are

 All insurance companies will invariably say that they are the best. One way of cutting through the clutter is to find out the retention rate of the insurer you are considering. That means how many of their existing policyholders renew their policies each year. You can get these details from your insurance agent or a representative of the insurance company. You can also try to look up online reviews, annual reviews, or by asking for testimonials from existing policyholders.

5. Evaluate How Claims are Handled

 Before purchasing a home insurance policy, you should find out how the provider handles any claims. Are claims handled by third-party call centers or by the company itself? Do they have a high claim settlement ratio? Do they make timely settlements?

In Summary

Home insurance is a critical aspect of owning a home. In the event of any unfortunate disaster, it can help you get back on your feet without having to incur an astronomical cost.

Photo Credit: Transport Executive 

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  • Neil Koehler

    I am insured because you many never know what's gonna happen at night while sleeping.

  • Danny Hunter

    Living in a vibrant area does have some disadvantages. It's safer to have a home insurance.

  • Jessica Saunders

    Great advice Anas

  • Dan Thornley

    With so many different types of home insurance policies available, it can be daunting choosing the right cover for your home.

  • Heidi Pepper

    Concise overview for beginners.

  • Tom Firth


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Anas Bouargane

Business Expert

Anas is the founder of CEF Académie, a platform that provides guidance and support for those willing to study in France. He previously interned at AlphaSense. Anas holds a bachelor degree in applied economics from the University Paris Sud.


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