Skip to content Accessibility info

Wichert Insurance Blog

All You Ever Wanted to Know About Insurance

A First-Time Homeowners Guide to Selecting the Right Insurance Policy

If you’re like most first-time homeowners, you aren’t going to Zillow or eagerly hunting for homeowners insurance. We’re all far more excited about the home we plan to buy, not the policy that will protect it!

We want to provide you with a straightforward guide to the less exciting part of buying a home so that you can feel confident and equipped to make the right choices for your family’s protection.

Keep reading to:

  • Understand the different types of coverage available to homeowners
  • Determine what, if any, additional coverage you need
  • Avoid common pitfalls of insurance selection
  • Discover tips to maximize your coverage while minimizing your cost

Types of Homeowners Coverage Available

Homeowners insurance is often a bundle of a variety of coverages that will protect your home and belongings. It’s important to be aware of the types of coverage available to you so that you and your family are properly protected. Comprehensive coverage keeps your home and property safe in the event of natural disasters, theft, or other unfortunate events, giving you protection from financial hardship and peace of mind.

These four types of coverage are typical in a homeowners policy:

  • Dwelling Coverage: Protects the structure of your home against damage from covered perils such as fire, windstorms, and vandalism.
  • Personal Property Coverage: Covers your belongings, such as furniture, electronics, and clothing, against theft or damage.
  • Liability Coverage: Protects you against lawsuits for bodily injury or property damage that you or your family members cause to others.
  • Additional Living Expenses (ALE): Covers the cost of living elsewhere if your home is uninhabitable due to a covered event.

Beware! To make a homeowners policy look more attractive and affordable, some insurance agents may cut out coverages that result in gaps in your policy that leave you vulnerable and potentially liable if something happens on your property. That’s why it’s important to know and understand what you’re signing up for rather than choosing the policy that costs the least amount of money.

What Isn’t Covered by Standard Homeowners Policies

Damage due to floods or earthquakes is not typically covered under standard policies. If you live in a flood-prone or earthquake-prone area, you should consider adding flood and/or earthquake insurance.

Assessing the Right Amount of Coverage for a Homeowners Policy

There are several ways your home can be insured from a value standpoint—replacement cost versus actual cash value, and market value versus rebuilding cost. Your market value doesn’t always equal the amount that you want to insure.

Replacement Cost vs. Actual Cash Value: Replacement cost covers repairing or replacing your home without depreciation. Actual cash value takes depreciation into account, leading to lower payouts.

Market Value vs. Rebuilding Cost: Insure your home based on the cost to rebuild, not the market value. The market value includes land price, which doesn’t need to be covered. Focus on the actual rebuilding cost, which may be higher or lower than the market value.

Your independent Wichert agent will help you make these determinations.

Common Pitfalls to Avoid When Selecting Homeowners Insurance

These mistakes can cost you substantially in the long run:

  • Underinsuring Your Home: As we discussed above, you want to avoid basing your insurance on market value alone. This can lead to insufficient funds to rebuild your home entirely in the case of a total loss.
  • Ignoring Exclusions and Limitations: Every policy has exclusions and limitations. Carefully read your policy to understand what is not covered and consider additional policies for those gaps.
  • Not Updating Your Policy: Homeowners insurance is not a set-it-and-forget-it purchase. Any time you make significant home improvements, acquire valuable possessions, or change the number of occupants, you should review your policy to ensure you have adequate coverage.
  • Overlooking Liability Coverage: Ensure you have sufficient liability coverage, especially if you have a high-risk feature like a pool or a trampoline. This can protect you from substantial financial loss in case of a lawsuit.

Tips for Maximizing Coverage While Minimizing Costs

To get the most bang for your buck when it comes to homeowners insurance, follow these best practices:

  • Shop Around and Compare Quotes: Different insurers offer different rates for similar coverage. Use comparison websites and consult with a Wichert insurance agent to get multiple quotes.
  • Bundle Policies: Many insurers offer discounts if you bundle home insurance with other types of insurance, like auto or life insurance. Your insurance agent at Wichert can help you take advantage of these types of discounts.
  • Increase Your Deductible: One way to reduce your monthly cost is to increase your deductible. The trade-off here is that if you increase your deductible, you need to make sure that you have enough savings to cover the deductible in case of a claim.
  • Implement Safety Features: Installing smoke detectors, burglar alarms, and sprinkler systems can reduce your premium because they lower the risk for the insurer.
  • Maintain a Good Credit Score: Many insurers use credit scores to determine premiums. A higher credit score can lead to lower rates.
  • Review Discounts: Ask your insurance agent about available discounts, such as those for being a new homeowner, being claims-free, or for having certain professions that insurers favor.

Because Wichert’s agents are local and independent insurance agents, we’re able to help you secure the best quote and plan from multiple providers. After all, you don’t need too much coverage, and you don’t want not enough coverage—you need a plan that’s just right. 

Connect with a Wichert agent in your area today for the expert guidance and support you need to protect your new home.