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posted in: Insurance

What to Consider when Purchasing Home Insurance

Whether you’re a first-time homeowner or an experienced homeowner who wishes to upgrade your current insurance policy, you should consider the following options when purchasing homeowners insurance.      

Types of coverages

The two most frequently purchased are broad form and risk of direct physical loss coverage.

Broad form coverage provides protection for perils that are specifically listed in the policy. Examples of such perils include fire, wind, theft, vandalism, frozen plumbing, and building collapse.

Risk of direct physical loss coverage is more comprehensive than the broad form coverage. In addition to the perils named above, it also covers accidental losses such as paint spills, ice damage, and counter-top burns. However, there are exclusions to this type of policy. Examples of losses excluded from the risk of direct physical loss coverage include earth movement, termites, rodents, and surface water damage.

Additional replacement cost coverage

Additional replacement cost is an option available on some homes. If you qualify for this coverage level and your home is destroyed, an insurance company will rebuild your home, even if rebuilding it costs more than the amount of insurance you have purchased. Today, the average homeowner has enough insurance to rebuild only about 80 percent of their house, in part, to rising rebuilding costs in recent years.   

We are among only a handful of insurers offering additional replacement cost coverage, with no caps, for qualified homes. That means we will pay the costs (less your policy deductible) to rebuild your house to the way it was should it be destroyed, even if the cost is higher than your policy limit.*  With a no-cap replacement cost policy, you can maintain the financial security of your family through even tough times.    

You might also consider purchasing replacement cost coverage for your personal property, such as televisions, DVD/Blu-ray players, stereos, and computers.  Replacement cost coverage allows for the replacement of personal property without depreciation.


Higher deductibles result in lower premiums.  Most insurance companies offer deductibles in $100, $250, $500, and $1,000 amounts.

When deciding upon a deductible, homeowners should consider their ability to pay the out of pocket expense at the time of the loss. The minimum deductible suggested for homeowners is $250. However, homeowners should also consider increasing their deductible to $500 to reduce their premiums.

Liability coverage

Liability coverage allows homeowners to protect their assets if they become involved in a lawsuit. A minimum of a $300,000 limit is recommended to protect your assets.  However, coverage can go as high as $1 million.

Learn more:

* Some special limits might still apply

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Alabama residents: Review the Alabama Bill of Rights for additional information.