For most people, their home is the largest investment they'll ever make. Before you even close on a mortgage you will need to have a homeowners insurance policy in place to protect that asset. However, not all policies are created equal.

"While this buying process, on the surface, seems like it is a commodity-driven product, you need to know that not all homeowners insurance programs provide the same coverage," said Matthew S. Desaulnier, president of Gerardi Insurance.

Desaulnier said asking the following questions will make you a much more informed consumer and better ensure you'll have the coverage you need.

How much coverage do I need for my home?

Desaulnier said you will want to insure your house for the replacement value -  what it would cost to rebuild - not the market value. Your insurance representative can help you determine the correct value.

What is mortgage protection insurance?

This is essentially life insurance to pay off the mortgage if something happens to a spouse or co-owner, Desaulnier said.

What is a personal umbrella policy?

This is generally $1,000,000 or more of added liability protection that would go over your properties, autos and recreational vehicles.  Desaulnier said everyone should consider this coverage.

Is my engagement ring covered by my homeowner's policy?

It is covered but Desaulnier said there is a limitation on most homeowner policies for theft.  By scheduling such items on your policy, you can insure the jewelry for anything that happens to it. 

Can identity theft be covered by homeowners insurance?

Yes.  Most homeowers insurance carriers have endorsements to protect you from identity theft.  Desaulnier said this is usually for a very small cost.

What is replacement cost versus actual cash value?

Replacement cost valuation is the actual cost to replace your property in today’s dollars.  The actual cash value is a valuation method that will take depreciation into consideration when determining the value of property.  Desaulnier said you obviously want to make sure your policy has replacement cost valuation. 

Is my home business covered by my homeowner’s policy?

No.  However, many homeowners insurance carriers offer endorsements to protect you. Desaulnier said it is really important to discuss this with your insurance agent because there are many exclusions and limitations when it comes to business at the home premises. 

What is service line coverage?  Do I need it?

Most homeowners policies will not cover utility lines and pipes coming into the home.  When one of these lines is damaged it can be very costly and will likely not be covered on your unendorsed homeowners policy.  Desaulnier said having service line coverage added to your home policy could save you thousands of dollars.

Do I need ordinance or law coverage?

Yes.  Especially with an older home.  Desaulnier said this coverage will protect you from new zoning or ordinance changes that you might have to comply with if your home is damaged.  Not all homeowners policies have this coverage.

What isn't covered by my homeowners insurance policy?

Generally, floods and earthquakes are not covered by most homeowners policies.  However, Desaulnier said there can be other things that are not covered.  He said it is important to discuss these things with your insurance agent when buying coverage.

In addition, Desaulnier suggests inquiring about the possibility of combining some of your other personal policies such as auto insurance to take advantage of bundle discounts. 

He also strongly recommends working with an independent agent who works with many insurance carriers.  

"This will help ensure that you get the best value for your premium dollars and they will be able to compare different insurance carriers when it comes to important items such as responsiveness and claim handling," Desaulnier said. "The process can be overwhelming but the worst thing you can do as a consumer is to not be informed.  You will be reminded of this later when a possible homeowners insurance claim occurs."

About Matt Desaulnier:

Matt has been in the industry and with Gerardi Insurance since 1996.  He is a graduate of Bryant University, a Certified Insurance Counselor (CIC), and a Charter Property Casualty Underwriter (CPCU).