One thing common to all homeowners is the need for homeowners insurance. In fact, if you are buying a home, mostly likely the mortgage company will not finance a home until you have adequate coverage.

Generally speaking, homeowners insurance is not terribly expensive, but if you live in a high risk area, such as areas prone to earthquakes or close to major waterways, the cost of homeowners insurance can be very high.

In order to help you in the process, I have written up a few tips to buying homeowners insurance.

To help you find the best insurance possible to suit your needs, you will first need information about the house itself. When was it built, what is the square footage, in what condition is the roof, electrical and pluming, and where is it located,.  These are just some of the questions you should be ready to answer.

The deductible is the amount that you have to pay before the insurance company protection kicks in when you file a claim. For example, if you have a claim of $1500, but you had a $500 deductible, the insurance company will only pay $1000.

Using the same deductible amount, if the amount of your loss was $350, the insurance company wouldn´t make any payment at all. Remember that with a higher deductible, certain small accidents, such as broken windows or water damage, will not be covered.

The higher the deductible you are willing to assume, the lower your premium will be. If you are buying a house, make sure the mortgage company accepts the deductible amount you are willing to assume. Some mortgage companies will not accept policies with deductibles higher than $1000.

When buying homeowners insurance, you are actually insuring the (replacement) cost of the home. You are not insuring the value of the land on which the home sits. The insurance amount should be equal to the amount of money it would cost to build another house on the land. Be sure to pad this amount to allow for inflation and any unusual  increase in the cost of materials.

Another option to consider in your homeowners insurance policy is the liability coverage. This coverage would cover things like the postman falling in your yard while deliverying mail, someone getting hurt in your house, and things like damage you or anyone from your household might cause to your neighbors home.

It is normal to have liabilty coverage of $300k to $500k. In any case, the additional cost per year of having higher coverage is relatively small.

Make sure you ask about possible discounts to your homeowners insurance. Most insurance companies offer discounts for alarms connected to security companies or local police departments.

You can also get a discount if you combine other policies, such as car or health insurance, to your homeowners insurance policy (also known as multi-policy discounts).

Also, don´t be shy about asking for an age discount either if you think you might qualify.

Now that you have more information on how to buy homeowners insurance, make sure you also remember to update your policy every 2 to 4 years. Make sure it is up-to-date with current market conditions, and don´t forget to communicate any changes to your insurance company, some of which might even save you money!

• Information on going bankrupt
• How to consolidate student loans