What Homeowners Insurance Policies Don't Tell You

Consider your needs when choosing your homeowners insurance.

Consider your needs when choosing your homeowners insurance.

Homeowners insurance can be complicated -- which may be part of the reason 31 percent of people with insurance weren't sure how much their home was insured for and 46 percent of homeowners didn't know which of their belongings were covered by their homeowners insurance in a 2010 MetLife survey, according to "Smart Money" magazine. Understanding the specifics of your homeowners policy can ensure that you have the coverage you need to protect your home.

You Should Re-Evaluate Your Coverage Every Year

If you've planned your policy to cover high-end items like your big-screen sound system or expensive fur coat, check the value of those items each year to make sure you're not paying for more coverage than you need. Many items drop in value over time, and you can adjust your insurance accordingly, says the Insurance Information Institute. Your homeowners insurance won't keep track of fluctuating values -- that's your job.

Traditional Policies Don't Cover Some Things

If you think homeowners insurance offers blanket protection, think again. Most homeowners policies don't cover damage caused by earthquakes or floods -- and many may not cover even basement flood damage if that damage is caused by sewer backups, says Loretta Worters, a vice president at the Insurance Information Institute, in "Smart Money" magazine. If you want coverage for these potential problems, you may have to purchase an additional policy.

Know What You Need to Make a Claim

Be sure you understand what materials you'll need if you have to prove a claim after fire or theft, recommends consumer advocate Clark Howard. You may need photos, receipts or other information to get reimbursed for your goods, even if you have insurance. Howard says an annual video update of your belongings is often a simple way to cover your bases, but make sure your method will fly with your insurers.

Ask About Options Before You Cancel

If money's tight, don't automatically assume that your homeowners insurance is a fixed expense that you can't afford -- many companies offer payment plans and can suggest ways to cut costs that you've never considered, says Steve Finnerty, regional sales director for Liberty Mutual Group, the nation's eighth-largest auto and home insurer.

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