Purchasing a home is one of the single most important investments you will ever makein a lifetime. Most customers cannot purchase their homes in full with cash, norcould they replace the home and all its belongings immediately if it wereirreparably damaged. Purchasing a home that is not adequately insured is a gamble? agamble that most people cannot afford to take.

Basic  home owners  insurance may be obtained by comparison shopping online. However, some peoplerequire more than just the basics. Those that are at risk for earthquakes, flood,forest fires or other natural disasters may require additional insurance beyond thebasic.

Investors that rent their properties may be protected with only structural buildinginsurance, flood insurance and earthquake insurance. However, primary home ownersmay have to worry about contents insurance as well. Comparison shopping will helpclients find the best prices for the least amount of money.

How Does a Home Owner Become Under Insured?

No one plans to be under insured. Many people do not obtain adequate coverage,because they cannot afford it or because they mistakenly thought they were covered.For instance, most people assume that basic insurance will cover all types offloods. However, basic insurance most often only covers a burst pipe or a leakingwater heater.

Know Your Claims Policy.

What happens if the river, lake or other body of water near your home rises andfloods your home? Will you be covered? In most instances, insurance companiesrequire an additional  policy for homes located in a flood zone. You could be paying apremium on your insurance when a catastrophe happens, and you still may not receiveany financial assistance to cover the loss, because natural disaster floods were notincluded in your policy. This is a prime example of being under insured.

Furthermore, your insurance may pay out cash value for the contents of your home orstructural damage, but depreciation may be factored into the cash payout. Therefore,the money you are given by the insurance company may not be enough to cover areplacement for a new item. Again, you may be under insured.

Replacement value insurance may be requested for those that would like theirpersonal items to be replaced with a comparable item today. This premium istypically higher than most.

Keep the Insurance Company Informed.

Some home owners often forget to inform their insurance companies when they add newadditions to their home or improve their home in other ways. This may effectivelyincrease the appraisal value of the home. If the home is damaged and this portion isnot reported, the home owner will not receive cash to replace that portion. Hence,the home owner will be under insured.

Home improvement items may include: An upgraded bathroom, a Jacuzzi tub, a deck, anew garage, a conservatory, an upgraded kitchen, new storm windows or shutters orany other item that may add value to your home. You may also need to reportadditions of flat panel televisions, computers, jewellery and any other valuableitems that may be added to the home. If your home increases in value for any reason,you may want to report this to the insurance company to make sure you have adequatecoverage for your home and its contents.

These are the most common ways a homeowner can become under insured. Home owners areadvised to take precautions to avoid enormous bills that they cannot afford.

What May be Included and Excluded in My Home Owner?s Insurance?

Most home owners insurance will cover the following catastrophic events in a basicpolicy:

1. Fire
2. Theft
3. Hail
4. Lightning
5. Wind
6. Aircraft
7. Vehicle
8. Smoke
9. Vandalism
10. Explosion
11. Volcanic Eruption
12. Riots

The following items are generally excluded from a home owner?s insurance policy:

1. Earthquakes
2. Condemnation
3. Floods
4. Intentional Loss
5. Neglect
6. Nuclear Hazard
7. War
8. Power Failure

Special insurance may be obtained for earthquakes and floods. However, they mayrequire additional insurance premiums. You may also be able to obtain insurance formaintenance and other items to avoid neglect of the home. Coverage of war relatedacts, power failure, nuclear hazard and others may be less common in the insuranceworld.

What about Personal Liability and Medical Expenses?

Many people often overlook this category. What if someone comes on your property andslips and falls? Alternatively, what if they are trapped in a fire and becomeinjured while at your home? Your insurance can cover these events, if you inquirethrough your insurance company. You may want to consider insurance to protect theinhabitants of your home that are not primary residents. If the person sues you, itmay become a costly expense. This is another area where you may be under insured.

What if My Property is Vacant and Uninhabitable?

If your property is vacant or uninhabitable, you may want to obtain a separatelyinsurance. Most insurance companies will not cover a home that is unoccupied for along period of time. The time period varies from insurance company to insurancecompany. Typically, the range is from 31 to 90 days.

Insurance companies are less likely to insure these homes because a pipe may burstwhile you are away and cause more damage than if you were home. A person may alsoenter your home and vandalize the home while you are away. Inquire with yourinsurance professional to obtain special insurance that will cover the home if it isempty for a period of time. This will help the home owner avoid being under insuredif something happens to the home while it is vacant.