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Key things to know about homeowner's insurance before you need it


This story is sponsored by Goldenwest Credit Union. Learn more about Goldenwest Credit Union.

The process of buying your first home can be an overwhelming experience. As important as the purchase process is, making sure your home is properly taken care of after the closing date is even more important. Having homeowners insurance isn’t just required, it can make or break your experience in your home if accidents happen and you need some financial help.

Goldenwest Insurance Services suggests seven key things to keep in mind when choosing your home’s coverage each year.

Shop with an independent agent

Before you start shopping for insurance, consider using an independent agent. The Balance explains that independent agents are a great place to start because they can check several different companies’ rates all at once. They can make sure you’ll get the best rate for your situation and will save money by not having to submit multiple quote requests.

Because independent agents are not employed by an insurance company, you get unbiased advice. Their desire is to provide you with the best insurance solution for your needs. Independent agents are also key to keeping your premiums down. When they get wind of a company about to raise their rates, an independent agent can be proactive in seeking a better deal for you elsewhere before your rates increase.

If purchasing a new home, ask for a C.L.U.E. report

When purchasing a new home, it is helpful to know what the claims and losses history has been for the property. LexisNexis explains that having a C.L.U.E. (Comprehensive Loss Underwriting Exchange) Personal Property report will provide a seven-year history of losses associated with the property.

Having a history of losses and claims filed on the property can be essential in anticipating what kind of coverage you need for your property.

Know how much protection you need and what your policy covers

Two of the most important questions you need to answer before deciding on a homeowners insurance policy are: how much liability/risk are you willing to take on, and how much of a deductible do you want to pay?

First, you'll need to figure out what you want your policy to cover. The Insurance Information Institute outlines that a policy usually will cover disasters such as damage from fires, lightning, hail and explosions, but little else. In every damage scenario, you'll want the limits on your policy to be high enough to cover the cost of rebuilding your home should one of these events occur.

Additionally, knowing what your policy does not cover can be more important than knowing what it does cover. Most policies to do not include damage caused by earthquakes or floods, so deciding if you want that coverage — and higher deductibles and premiums — is important.

Keep in mind that expensive personal items, such as jewelry, may not be covered in a standard policy either and may require that an additional policy or rider.

Create a home inventory list

When anticipating the coverages for your home, it will be important to know exactly what is in your home and what it would cost to replace it. Goldenwest Credit Union suggests creating a home inventory list for exactly this purpose.

They recommend organizing items by location or category and including information such as price, make, model, serial number, date of purchase, where it was purchased, receipts, photos, and current replacement cost.

If you ever need to file a claim, a home inventory list will be key to receive the right compensation for your possessions.

Consider purchasing a rider or umbrella coverage if you need extra protection

Lawsuits have become commonplace, and unfortunately, standard homeowners insurance policies do not pay out for expensive litigation and legal fees. Think of an umbrella policy as extended liability coverage that protects homeowners in the event of getting sued.

The Balance suggests that because no one can anticipate these costs, and few have the ability to pay the potentially large sums of money, “umbrella insurance is not just for the wealthy anymore, but needed protection for every policyholder.”

Understand how you will be reimbursed

Before you begin a homeowners insurance policy, it is important to understand how an insurance company will pay out the claim.

The Insurance Information Institute explains that the most common forms of payout or reimbursement are a cash value, replacement cost, or a guaranteed or extended reimbursement. This is where having a well-documented home inventory list will be critical in you receiving the reimbursement you deserve.

Ask for discounts

Lastly, don’t be shy about asking your agent for any available discounts. You might receive discounts for having a security alarm, deadbolt locks, maintaining good credit, combining auto and homeowner policies, making your home more storm resistant, and more.

The Insurance Information Institute stresses that a policy might differ in hundreds or thousands of dollars based on the discounts available, making it well worth it to ask.

In reviewing your home insurance needs every year, you may find that you are eligible for additional discounts, need to increase coverage or make other adjustments. If you’re not sure where to start, Goldenwest Insurance Services is here to help. Having access to many insurance carriers, Goldenwest Insurance Services will find the right solution for you.