[MUSIC PLAYING]

Scott D. Kantor:

Finding the right insurance for your home is important, but what is the right insurance? Well, you may need several types of policies, but you'll definitely need homeowners insurance. The same is true if you're buying a condo or a co-op or even renting. But what is homeowners insurance exactly?

We'll talk about what's usually included in a homeowner's policy, what's not, coverage amounts, how much it costs, and how to get it. We'll also touch on a few other types of insurance you may want or need to consider, but let's start with homeowners policies. They usually cover three things: losses and damages to your residence or your belongings for things like fires, storms, theft, and internal water, like plumbing; liability for accidents that happen on your property, say someone slips and falls and sues you.

It also covers your and your family members' liability for injuries to others or damage to their property that occurs anywhere in the world. For example, if your dog bites someone while you're out walking or you accidentally break a neighbor's priceless vase. Some policies even cover things like libel, slander, and defamation. And finally, many policies cover additional living expenses for loss of use.

That is, if you need to stay in a hotel or rent a house while your home is being repaired. Now, homeowner's policies cover a lot but not everything. Damages caused by floods and earthquakes are not routinely included. Sometimes earthquake coverage can be added to your policy.

This is known as a rider, but for the most part, if you live in an area prone to flooding or earthquakes, you may need to purchase separate flood and earthquake insurance. And that's not all. Damage caused by termites, rodents, and other animals, say a cat destroys your couch, faulty construction, wear and tear, and neglect aren't included in homeowner's policies. Neither are most business activities or intentional acts.

Sometimes it can be difficult to obtain sufficient coverage. In areas prone to wildfires and hurricanes, coverage can be very expensive. And then, for those causes of loss that are included in your homeowner's policy, there are coverage limits. For your residence, most policies will cover the cost to rebuild your home up to your policy's dwelling limit.

That is the maximum amount they'll pay to rebuild your home. This limit may be increased, and better companies will often guarantee the full cost of rebuilding, although you may have to request it. Personal property coverage on homeowner's policies is typically 50% of the dwelling limit, although most policies will allow you to increase or decrease it. You may also want to consider an additional policy for things like jewelry, art, or other collectibles.

This is known as valuable articles insurance. For liability, most homeowner's policies offer coverage ranging from $100,000 to $500,000. Since most experts agree that even $500,000 is too low, you might want to consider an additional policy called umbrella liability insurance. For more on this, please watch our video, "What Is Umbrella Liability Insurance?"

So, what does all this cost? It's safe to say that better homeowners insurance usually costs more. Beyond that, your premium, that is, what you'll need to pay for insurance, is based largely on how much insurance you're buying. It's also affected by where your home is located.

For example, is it prone to extreme weather events? But you may be able to lower your costs. Here are three tips. One, you can choose a higher deductible, the amount you pay before insurance kicks in.

Higher deductibles mean lower premiums. Just make sure it's lowering your premium enough to be worthwhile. Two, security systems. Fire alarms and water leak detection systems can help.

And three, you can look for multiple policy discounts, discounts for bundling your homeowner's policy with your auto and sometimes valuable articles insurance. So, how do you choose a homeowner's policy? Rates are important, but so is finding a solid company and high-quality service. It's best to compare quotes from multiple insurers.

Look at what's covered, coverage amounts, exclusions, and discounts. You can do this yourself, but sometimes it can be helpful to work with a broker or an agent. OK, we've covered the basics of homeowners insurance and some other types of insurance you might need. Let's recap.

Homeowners insurance helps protect against damage to your home and belongings caused by covered events like fires, theft, and storms. It also includes liability coverage and, often, additional living expenses. You may need other types of insurance, flood, earthquake, valuable articles, or umbrella liability insurance. Better policies tend to cost more, but cost isn't everything.

You'll want a reliable firm that's easy to work with, so it can pay to do your homework. It may be helpful to use an insurance broker or agent. Bottom line, finding the right insurance for your home can safeguard your major investment and provide you with valuable peace of mind.

[MUSIC PLAYING]