Homeowners Insurance Basics

Know the ins and outs of homeowners insurance basics to sell the best policies
By Jess Buskirk Being well-versed in homeowners insurance basics is essential to becoming a top-selling insurance agent. Potential clients want the best protection for their investment without breaking their budget. The average home insurance buyer considers four things when purchasing a policy: the price (premium), the amount of protection, the agent's knowledge and friendliness, and homeowners insurance ratings.

A homeowners insurance rating depends on the company's financial security versus its liability. The highest rating is AAA, which means the company's financial security characteristics are extremely strong. The next highest rating is AA, then A, followed by BBB, BB, and so on through C. A rating of R means the company is under regulatory suspension and NR means the company hasn't been rated. It's important to know your company's rating and how it earned it. When learning the basics of homeowners insurance, know the following:

1. All homeowner insurance plans cover the structure of the home.

2. Personal property insurance has limits of liability.

3. Liability insurance covers the clients even if they are responsible for harm.

4. Adding guest medical coverage pays for medical expenses if someone sustains an injury on the property.

Cover a home's structure with a homeowners insurance plan

Structure insurance covers damage a house sustains during a natural disaster. The insurance limits should cover the amount of money it would cost to rebuild the home, taking into account current construction costs. This could be more or less than the home's value, so don't base the insurance limit on an appraisal.
Try:  Read more about covering the structure of a home, including how to estimate the amount of coverage needed at the Insurance Information Institute. For basic information on structure insurance, visit Erie Insurance.

Protect personal property with homeowner insurance

While structure insurance pays to rebuild a home, personal property insurance reimburses the client for damaged or stolen valuables. Take into account the client's personal situation when conducting a home insurance comparison. Some companies will cover a wedding ring if the client's toddler flushes it down the toilet, while others will only reimburse if the homeowner files a police report.
Try:  Read more about insuring personal property at CompuQuotes. The homeowners insurance comparison company provides information on limits of liabilities for common belongings found in the home. For tips on how to inventory personal property, visit the Alabama Cooperative Extension Program.

Offer a homeowners insurance policy that covers the client if they're found negligent

When clients compare homeowners insurance policies, they may ask about coverage if their negligent behavior results in harm. This type of protection is liability insurance. The best homeowners insurance will pay for the client's legal representation and the injured party's medical expenses if, for example, their dog bites the mail carrier.
Try:  Read the answers to frequently asked questions about liability insurance at MetLife. The American Bar Association offers an explanation of liability insurance and the type of liability insurance an average homeowners insurance plan covers.

Include a clause in the homeowners insurance policy that extends to guests

Guest medical protection covers a person's expenses if they sustain an injury on the client's property, even if it was by no fault of the client. A friend breaking his arm while playing football in the backyard is an example of when this type of coverage would be necessary.
Try:  Learn more about guest medical coverage by visiting Allstate. Take note of the list of reasonable medical expenses clients can expect an insurance company to reimburse. Find a definition of guest medical coverage, as well as several other insurance terms, at InsureSense.Com.

• Adding an alarm system or replacing a furnace lowers the cost of insurance, so always ask potential clients if the home has any safety upgrades when they want homeowners insurance quotes.