Keeping the Roof Over Your Head: Homeowners Insurance

If you own a home it's important to carry the right type and amount of homeowners insurance so you're prepared for the unexpected. How can you be sure?

First, determine how much coverage you need. There are four main points to consider:

- Carry enough insurance to cover the cost of rebuilding your home . This is not the price you paid for your home, but what it would cost to rebuild your home today if it were totally destroyed. This is called replacement coverage. To figure out the replacement cost of your home, find out the average local building costs (the average cost per square foot to build a home in your geographic area) and apply it to your home's size and style. When determining the value of your home, consider the quality of construction, including extras that other homes don't have - things like plaster walls, antique wood, or upscale kitchen appliances.

- Determine the value of your personal property. You can insure your personal property in two ways: actual cash value or replacement cost. Cash value pays the cost to replace the item, minus depreciation. Replacement cost will reimburse you for the cost to replace items at today's prices. Many homeowners policies provide coverage for personal property for 50 percent to 70 percent of the amount of the insurance you have on your structure or dwelling. But for some people, this isn't enough coverage. To help you decide, make a detailed list of everything in your home and determine how much it would cost to replace the items if you bought them today.

- Where will you live if your home is destroyed? Many homeowners policies pay for temporary living costs - including hotel bills and meals - if your home is destroyed. Review your policy or talk to your insurance agent to find out how much coverage you have and for how long it lasts.

- Make sure you have sufficient liability coverage. Liability coverage protects you against lawsuits for accidents, injuries (including animal bites), or property damage that occur on your property. Policies generally provide $100,000 of coverage, but the level most carriers recommend is $300,000 to $500,000. Talk with your agent to find out what limit is best for you.

Second, choose a reputable insurer. Look at the following factors:

Cost. Get quotes from several carriers. A good place to start is with an independent insurance agent who offers policies from a variety of carriers. The agent can do much of the legwork involved in comparison shopping. To save even more money, some insurance carriers offer discounts if you have more than one policy with them.

Service. Low premiums mean nothing if you can't contact your agent or if your carrier is slow to pay claims. Ask your agent about claims turn-around times; carriers who pay claims more quickly generally have better overall customer service.

Financial stability. Insurers sometimes go out of business, particularly after sustaining heavy losses. Know your insurance carrier's rating, which serves as an indicator of financial stability. An A or higher rating from Standard & Poor's, or an AA rating from Moody's Investor Service, can indicate an insurer's strength. Check the A.M. Best rating as well. Look for a rating of B+ or higher.

We don't always know when Mother Nature will send forth her fury, but we can be prepared for unexpected disasters. Review your homeowners coverage every year and talk to your insurance agent if you have questions. Don't compound the disaster of losing your home by not having adequate insurance coverage to replace it.

Contact your Johnson Insurance representative for more information.