Get the Right Protection for Your Home

Homeowners insurance is one of those financial facts of life that just kind of happens to you. When you buy a home, the mortgage lender will insist on insurance coverage, so you get an agent's name, call and buy a policy. Odds are the premiums are even paid from the same lender-controlled escrow account that pays your property tax. Out of sight, out of mind. You don't give homeowners insurance much thought -- unless you try to file a claim and get into a squabble with the company.

The danger here is that insuring your home year after year becomes so routine that you fall prey to three potentially costly errors:

- Assuming that all homeowners policies are alike. Actually, policies come in several varieties, and companies' versions of those varieties differ.

- Taking it for granted that your insurance company charges about the same premium as others. Prices, in fact, can differ by astonishingly large margins.

- Failing to update your coverage periodically. Even if your policy protects against inflation, the value of your home may outpace it; and as you accumulate more possessions, you may find your personal property dangerously underinsured.

To make sure you have the right protection for your property, review the basic aspects of homeowners policies described here:

Coverage for the House and Contents

Here's what a typical policy will -- and won't -- cover.

Liability Coverage

Make sure your insurance will pay if someone is injured on your property.

How to Find the Best Deal

Get several quotes and ask about discounts.

When Disaster Strikes

Follow these tips to ensure your policy pays when you need it.

Other Home-Related Insurance

A standard policy might now cover everything you need. Find out what other types of policies might come in handy.

Adapted from Kiplinger's Practical Guide to Your Money, by the editors of Kiplinger's Personal Finance magazine (Kaplan Publishing. Copyright 2005 The Kiplinger Washington Editors, Inc.) Available wherever books are sold or direct at kiplinger.com/store/books.