Whether you’re taking advantage of the current foreclosure epidemic to purchase your first new home in Atlanta, or are merely trying to reduce what you spend on insurance every month, there are certain questions you probably have. Among them: What do you really need in the way of coverage? How can you tell if you’re getting a good deal on your policy? The answers to these queries are different for each of us, but all are rooted in the fundamentals of homeowners policies.

What Policies Typically Cover

While the details of all homeowners insurance policies differ, most have the same three basic categories of coverage:

  • The physical structure of your home
  • The personal property within your home
  • People who enter your home as employees or guests

Here’s a breakdown of each category:

  • Physical Structure: This is the part of your policy designed to cover physical damage to your home that is caused by extreme weather or other hazards, like fire. It is this coverage that people refer to when they talk about “hazard insurance,” and it usually extends to all structures on the property, such as detached garages. Coverage of flood damage, however, is typically excluded, and requires a separate policy if you live in a flood zone.
  • Personal Property: While there are many methods of covering the contents of your home, the most common method is to simply set a value, usually a percentage of your overall coverage, though specific high-value items like jewelry and electronics may require special riders with extended coverage. To make sure your belongings are covered, you should make a habit of reviewing your inventory at least once a year. You may also want to document the contents of your home by taking pictures.
  • People Who Visit: The third part of your policy is made up of liability coverage, which addresses claims that may be filed for injuries or damages suffered by people outside your family who enter your home as employees or guests. Generally liability clauses begin with $100,000 of coverage, but this can be increased, which is advisable if you own a business or are an especially prominent member of your community.

Rate Shopping

Once you understand the components of the average homeowner’s insurance policy, you can begin comparing rates. Just as with auto insurance there are many ways you can reduce the amount you pay in premiums. Some of those methods include:

  • Take a high deductible: The higher your deductible – the amount you pay out of pocket if you file a claim – the lower your premium. Be careful – don’t agree to a deductible so high you won’t be able to pay it.
  • Safety counts: Certain safety systems, such as monitored alarms, also give you an insurance discount.
  • Bundle up: By bundling your auto and home insurance with one company, you’ll save money on both policies. Add life insurance, and you’ll get a bargain on that as well.

The methods listed above are just a few ways to reduce your premium. Be sure to ask your insurer for any discounts they may offer.

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