Buying a home is a major investment, and most people take their time shopping around for just the right one. To protect your investment you should spend enough time to make sure you are buying the right homeowner's insurance policy. But sometimes, however, selecting just the right policy can be a difficult task. Your insurance agent has probably given you several different policies to choose from, and they are no doubt filled with the usual insurance terminology that can sometimes be confusing.

Important questions such as "How much insurance do I need?" and "Am I covered if a flood strikes?" need to be addressed. Keep these tips in mind when it's time for you to purchase homeowner's insurance:

• Ask how much it would cost to rebuild your home. Many people only insure their house for the amount they paid for. That figure is wrong; you need to base your insurance amount on the rebuilding and replacement costs. Your insurance agent can assist you in calculating the proper amount of replacement insurance you really need. And have an annual review of your insurance policy to keep up with inflation.



• Ask specifically about flood insurance coverage. Most homeowners insurance policies do not cover flood damage; your insurance agent can help you find a good policy to cover damages from any floods. Or you can contact the Federal Insurance Administration and ask about the National Flood Insurance Program.



• Ask about the deductible amounts. Sometimes you can save money on your premiums by having a higher deductible amount.

Remember to make a list of your personal possessions, and also include photographs or even a videotape of everything you own. Make sure you take the time to understand all of the legal terms that are included in your homeowners insurance policy. A question asked now can save lots of heartache in the future.

See also: Mortgage Refinancing, Managing Debt, and Home Budgeting