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The Sandy Spring Way

Buying a Home: Part 2

March 15th, 2013 | By Sandy Spring Bank

What to Look for in a Homeowners Insurance Policy

Buying a HomeInsuring your home and its contents is a prudent step toward controlling your financial future. While no one expects a catastrophe, disaster can strike. It could be a fire, roof leak, hail storm, flood, break-in or some other mishap caused by nature or by another individual. Your protection should also cover the costs of repairing or replacing your home if needed.

Components of a Homeowners Policy

Homeowners insurance covers the cost of rebuilding or repairing your home and other structures (garage, shed, etc.) if the home is destroyed or damaged. It covers the contents of your home in the event of damage or theft, and it also protects you against your liability for injuries to other people or damages to their property.

The Structure

You should have enough insurance to cover the expense of rebuilding your home if it is completely destroyed. Even though you know the price of your home, remember that price included the land. You may want to get an estimate of actual replacement costs for the structure. Your mortgage lender or an insurance agent can probably give you an estimated per square foot replacement cost, so make sure you have at least that much insurance. Also be sure to review that number every few years as costs of construction continue to rise.

Contents in Your Home

Most homeowners policies include coverage for your personal property in your home, such as furniture, clothing, some electronic devices and even food in the pantry. The key is to know what you have, so prepare an inventory of everything valuable in your home. While this can seem like a thankless task, it will be invaluable if you have a claim. At a minimum, take pictures or video of your belongings. Most people have a very difficult time just remembering what they own. Keep a copy of this inventory in a safe place (like a safe deposit box) and away from your home.

Also be sure your insurance policy contains a replacement cost provision to cover the cost of replacing your personal property without depreciation. For example, if you had a fire in your home and you lost a couch, that couch you bought for $800 six years ago may have an actual cash value of only $300 and a new one may cost $900. With a replacement cost provision, you would get the $900 instead of just $300 to buy a couch of similar kind and quality as the original.

If you have especially valuable items, such as jewelry or art works, you may want to consider a special rider to your policy to cover those items. Discuss this with your insurance agent and read the policy carefully. Be sure to understand how computers, stereos and other electronic items are handled.

Liability Coverage

Homeowners policies include liability protection that covers damages you cause to others inside and outside of your home. If a visitor trips and breaks a leg by falling over an electrical cord running across your family room, your policy will take care of the visitor’s expenses. Your policy also covers damages caused away from your home.

Many homeowners policies include a standard amount of liability coverage of $100,000 or $250,000. You should examine your policy. With the high level of jury awards being given out in today’s society, you may want to buy an additional umbrella policy to provide extra protection. These umbrella policies are usually inexpensive and can provide coverage up to $1 million or more. You can discuss this with an insurance agent.


The deductible is the amount of loss you are responsible for before the policy starts to pay. The lower the deductible is, the higher the insurance premium. Be sure to look at the options in your policy. Many individuals use insurance purely as protection against major catastrophes and choose high deductibles to save on insurance. High deductibles also save the hassle of making a claim. Consider what level of loss you can accept and choose your deductible accordingly.

Sandy Spring Bank can help you with your personal insurance needs. Visit https://www.sandyspringbank.com/insurance/personal.aspx for more information.


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