There are a lot of reasons why people get homeowners insurance. But it can understandably be a bit intimidating to actually commit to homeowners insurance. It's important that you make an educated decision when purchasing this important insurance type. The more you know, the easier it will be for you to make a decision regarding what is best for you. With that in mind, let's look into what you should know about homeowners insurance before making that choice.

1. Understand How Much Coverage You Need

There is no doubt that you will need homeowners insurance if you buy a house. Without homeowners insurance, you will not be able to properly protect your belongings and property. The question is really more of how much coverage you will need. There are cases in which this will be determined by your mortgage lender. They may require you to get homeowners insurance, in fact. Remember too that what you bring into the home in terms of personal belongings will also affect how much coverage you need. Be prepared for the fact that less isn't always more with homeowners insurance. You must make sure that you are properly covered.

2. Know Your Investment

In many cases, you will need to choose between two types of coverage. One will be reimbursing the replacement cost, which is the amount it would take to rebuild or replace your home or rebuild the damages with materials of similar quality. The other will be the actual cost value, which is the value of the property lost after it had depreciated in value. Overall, your home should be insured for at least 80% of its replacement value. Keep in mind that according to The Insurance Information Institute, in 2018 alone, 7% of insured homes had a claim as reported by ISO. A total of 98.1% of those had claims that were sourced to property damage, including theft.

3. Ask For Discounts

You won't know about discounts if you don't ask. When speaking to homeowners insurance agents, ask about whatever discounts you can get. Things like insuring your car and your home with the same company can potentially get you a discount, and you need to take advantage of these opportunities.

Remember that just as you'll shop around for homeowners insurance, it may get confusing. Look at several different companies and analyze their different insurance policies. This will aid your decision.