5 Things to know about Homeowners Insurance

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5 Things to know about Homeowners Insurance

Did you know that your Homeowners Insurance Company can drop you after making just 2-3 small claims. But there are some key steps that you can take to protect yourself. I am Kim Lankford, Contributing Editor with Kiplinger's Personal Finance Magazine and I am here to tell you how you get the best Homeowners Insurance at the best price and protect your coverage.

1. Don't make small claims

The most important thing to keep in mind is to not make small claims. Insurers really have been dropping people after making just $200 or $300 claims, two or three times. The key thing is to raise your deductible to at least a $1000, which can lower your premiums by up to 25% and prevent you from making some of those small claims that can get you dropped.

2. Check your CLUE report

The next step is to check out your CLUE report. Insurance companies share information with each other through a database called the Comprehensive Loss Underwriting Exchange. It's important for you to check your CLUE report to make sure there aren't any errors that are making it very difficult for you to get coverage or for your rates to get increased from your insurer. Go to ChoiceTRUST.com and take a look at your CLUE report. It's also important to look at your CLUE report before you buy a house, because the insurers keep track of the claims made on the house and you can have a difficult time getting coverage even if you have never made a claim with that house before.

3. Have enough coverage

Next, make sure you have enough coverage. When people add additions or do major home improvements, they need to let their insurance company know so they can increase their coverage amount. Generally, your premiums will not increase by very much, which will have hundreds of thousands of dollars of extra coverage. It's good to work with an insurance agent who can go through your house and give you an appraisal or go to a website like AccuCoverage.com where you can use some of the same databases that builders use to figure out the insurance costs.

4. Independent agent

Next, it's most important to work with an independent agent when you are shopping for coverage, especially if you live in a high-risk area such as a coastal area. It's got much more difficult for people to get coverage on the coasts, but an independent agent can help you figure out if there is an insurer who can offer that coverage, what you can do to protect that coverage and what will you do need to go with your state's high-risk pool.

5. Ask what isn't covered

Finally, ask what isn't covered. One of the key things that's excluded from Homeowners Insurance policies is flood coverage, but you can get a low-cost policy from the federal government. If you go to FloodSmart.gov, you can get prices there and also find the risk of our house. Also, things like sewage backup coverage, which could lead to tens of thousands of dollars in claims, generally isn't covered automatically under insurance policies, but you can often add a rider for just $30 a year to add that coverage, which can be very valuable.

I am Kimberly Lankford and these are the basics.