1. Coverage for the structure of your home.
   
   This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or other disaster listed in your policy. It will not pay for damage caused by a flood, earthquake or routine wear and tear. When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.
   
   Most standard policies also cover structures that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home. If you need more coverage, talk to your insurance agent about purchasing more insurance.
2. Coverage for your personal belongings.
   
   Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire, hurricane or other insured disaster. Most companies provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of insurance on the structure of your home, you would have between $50,000 to $70,000 worth of coverage for your belongings. The best way to determine if this is enough coverage is to conduct a home inventory.
   
   This part of your policy includes off-premises coverage. This means that your belongings are covered anywhere in the world, unless you have decided against off-premises coverage. Some companies limit the amount to 10% of the amount of insurance you have for your possessions. You have up to $500 of coverage for unauthorized use of your credit cards.
   
   Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. Generally, you are covered for between $1,000 to $2,000 for all of your jewelry and furs. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for its appraised value. Coverage includes "accidental disappearance," meaning coverage if you simply lose that item. And there is no deductible.
   
   Trees, plants and shrubs are also covered under standard homeowners insurance. Generally you are covered for 5% of the insurance on the house -- up to about $500 per item. Perils covered are theft, fire, lightning, explosion, vandalism, riot and even falling aircraft. They are not covered for damage by wind or disease.
3. Liability protection.
   
   This covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by your pets. So, if your son, daughter or dog accidentally ruins your neighbor's expensive rug, you are covered. However, if they destroy your rug, you are not covered.
   
   The liability portion of your policy pays for both the cost of defending you in court and any court awards -- up to the limit of your policy. You are also covered not just in your home, but anywhere in the world.
   
   Liability limits generally start at about $100,000. However, experts recommend that you purchase at least $300,000 worth of protection. Some people feel more comfortable with even more coverage. You can purchase an umbrella or excess liability policy which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits. Generally, umbrella policies cost between $200 to $350 for $1 million of additional liability protection.
   
   Your policy also provides no-fault medical coverage. In the event a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without their filing a liability claim against you. You can generally get $1,000 to $5,000 worth of this coverage. It does not, however, pay the medical bills for your family or your pet.
4. Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.
   
   This pays the additional costs of living away from home if you can't live there due to damage from a fire, storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20% of the insurance on your house. You can increase this coverage, however, for an additional premium. Some companies sell a policy that provides an unlimited amount of loss-of-use coverage -- for a limited amount of time.
   
   If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

The different types of policies are fairly standard throughout the country. However, individual states and companies may offer policies that are slightly different or go by other names such as "standard" or "deluxe." The one exception is the state of Texas, where policies vary somewhat from policies in other states. The Texas Insurance Department (http://www.tdi.state.tx.us) has detailed information on its various homeowners policies.

The below chart lists the disasters covered in each of the following types of policies:

* HO-1, HO-2 and HO-3 refer to standard Homeowners Policies.

+HO-1 has been discontinued in most states.

If You Own Your Home

If you own the home you live in, you have several policies to choose from. The most popular policy is the HO-3, which provides the broadest coverage. Owners of multi-family homes generally purchase an HO-3 with an endorsement to cover the risks associated with having renters live in their homes.

HO-1: Limited coverage policy

This "bare bones" policy covers you against the first 10 disasters. It's no longer available in most states.

HO-2: Basic policy

It provides protection against all 16 disasters. There is a version of HO-2 designed for mobile homes.

HO-3: The most popular policy

This "special" policy protects your home from all perils except those specifically excluded.

HO-8:Older home

Designed for older homes, this policy usually reimburses you for damage on an actual cash value basis which means replacement cost less depreciation. Full replacement cost policies may not be available for some older homes.

If You Rent Your Home

HO4-Renter

Created specifically for those who rent the home they live in, this policy protects your possessions and any parts of the apartment that you own, such as new kitchen cabinets you install, against all 16 disasters.

If You Own a Co-op or a Condo

HO-6: condo/co-op

A policy for those who own a condo or co-op, it provides coverage for your belongings and the structural parts of the building that you own. It protects you against all 16 disasters.

Most home insurance polices cover all disasters listed below. Check your insurance policy for the "perils" covered.

* HO-1, HO-2 and HO-3 refer to standard Homeowners Policies.

+HO-1 has been discontinued in most states.

1. Floods
   You can purchase this coverage directly from your homeowners insurance agent. However, the policy is provided by the Federal Flood Insurance Program (800-427-4661, http://www.fema.gov/business/nfip/ ).
   
   You can get replacement cost coverage for the structure of your home, but only actual cash value coverage is available for your possessions. There may also be limits on coverage for furniture and other possessions stored in your basement.
   
   Flood insurance is available for renters as well as homeowners. You will need flood insurance if you live in a designated flood zone. But also consider buying it if your house could be flooded by melting snow, an overflowing creek or water running down a steep hill. Don't wait until the evening news announces a flood season warning to buy a policy. There is a 30-day waiting period before coverage takes effect.
2. Earthquakes This coverage can be a separate policy or an endorsement to your homeowners or renters policy. It is available from most insurance companies. In California, it is also available from the California Earthquake Authority. In earthquake prone states like California, the policy comes with a high deductible.
3. Maintenance Damage It is your responsibility to take reasonable precautions to protect your home from damage. Your insurance policy will not cover damage due to lack of maintenance, mold, termite infestation and infestation from other pests.

You Would Be Considered High-Risk…

• If your home is located in an area prone to severe weather such as hurricanes, windstorms, tornadoes or hail.
• If you live in an urban area with high crime, vandalism and theft.
• If your home has an old plumbing, electrical and/or heating system, because these pose a higher chance of causing fire or water damage.

If one or two insurers turn you down, don't despair. You do have other options. If you are buying a new home, ask the real estate agent, mortgage lender or builder for names of companies that write in your area. If it's an existing home, find out from the previous owners who insured the house.

If You Still Can't Find Coverage, Consider the Following:

1. Ask for help from an insurance professional.
   Talk to the agent or company representative that previously insured your home or is currently insuring your car, boat or business. If the problem is not where the house is located, but the condition that it is in, find out what type of improvements or disaster-resistant features would be needed to make your home more insurable. The Institute for Business & Home Safety (IBHS) also provides information on natural hazards, community land use and ways you can protect your property from damage. It can be reached at http://www.ibhs.org.
2. Talk to your neighbors and find out which insurers they use.
   Get the names of any agents who may be knowledgeable about the specific risks in your neighborhood.
3. Call your state insurance department.
   It can generally provide you with a list of insurers that write in your area. It might also have information regarding community groups that help homeowners with insurance problems such as the Neighborhood Reinvestment Corporation.

If You Still Can't Get Insurance, Find Out if Your State Has a Special Insurance Plan Known as Shared Market.

Generally, Two Types of Plans Exist:

1. FAIR Plans
   
   Fair Access to Insurance Requirements (FAIR) Plans were created in the 1960s to make insurance available in areas that had abnormally high exposure to risks over which they had no control. These plans are insurance pools that sell property insurance to people who can't get coverage in the voluntary market.
   
   FAIR Plan policies may cost more than private insurance and may offer less coverage, but they offer insurance protection where none would otherwise exist. All FAIR Plans cover losses due to fire, vandalism, riot and windstorm. About a dozen states have some form of a standard homeowners policy, which includes liability. In California, the Plan covers brush fires. Georgia and New York provide wind and hail coverage for certain coastal communities.
   
   In order to qualify for FAIR Plan coverage, you must:
   
   
   • Make improvements that limit the risk of fire, theft or water damage, such as upgrading your electrical wiring, heating or plumbing systems, repairing your roof or improving security.
   • If you do not correct conditions that make your home prone to losses, the FAIR Plan administrator has the right to deny insurance coverage.
   Below are the states that offer FAIR Plan Insurance or assistance in getting coverage, and the telephone numbers of Plan administrators:
   
   FAIR Plan Administrator Phone Numbers

   State	Telephone Number
   Alabama	334-943-4029
   California	213-487-0111
   Connecticut	860-528-9546
   Delaware	215-629-8800
   District of Columbia	202-393-4640
   Florida JUA	850-513-3700
   Florida Windstorm Und. Assoc.	904-296-6105
   Georgia	770-923-7431
   Hawaii	808-531-1311
   Illinois	312-861-0385
   Indiana	317-264-2310
   Iowa	515-255-9531
   Kansas	785-271-2300
   Kentucky	502-425-9998
   Louisiana FAIR Plan	504-831-6930
   Louisiana Beach Plan	504-831-6930
   Maryland	410-539-6808
   Massachusetts	617-723-3800
   Michigan	313-877-7400
   Minnesota	612-338-7584
   Mississippi	601-981-2915
   Missouri	314-421-0170
   New Jersey	973-622-3838
   New Mexico	505-878-9563
   New York	212-208-9700
   Ohio	614-839-6446
   Oregon	503-643-5448
   Pennsylvania	215-629-8800
   Rhode Island	617-723-3800
   South Carolina	803-737-6180
   Texas	512-899-4900
   Virginia	804-358-0416
   Washington	206-367-6270
   West Virginia	215-629-8800
   Wisconsin	414-291-5353

2. Beach and Windstorm Plans
   
   In seven Atlantic and Gulf states, there is a counterpart to the FAIR Plans called Beach and Windstorm Plans. They provide residents and business owners, in designated areas, with coverage against hurricanes and other severe windstorms.
   
   Windstorm Plans in Florida, Mississippi, South Carolina and Texas offer coverage only against wind and hail damage. Plans in Alabama and North Carolina offer coverage for fire as well. In New York, the Coastal Market Assistance Plan helps homeowners get coverage if their application has been rejected by at least three private insurers.

It kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. An umbrella policy will also cover you for things such as libel and slander.

For about $150 to $300 per year, you can buy a $1 million personal umbrella liability policy. The next million will cost about $75, and $50 for every million after that.

Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your home insurance policy before selling you an umbrella liability policy for $1 million of additional coverage.

Start by making a list of your possessions, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have. For clothing, count the items you own by category -- pants, coats, shoes, for example -- making notes about those that are especially valuable. For major appliance and electronic equipment, record their serial numbers usually found on the back or bottom.

Don't Be Put Off!

If you are just setting up a household, starting an inventory list can be relatively simple. If you've been living in the same house for many years, however, the task of creating a list can be daunting. Still, it's better to have an incomplete inventory than nothing at all. Start with recent purchases and then try to remember what you can about older possessions.

Big Ticket Items

Valuable items like jewelry, art work and collectibles may have increased in value since you received them. Check with your agent to make sure that you have adequate insurance for these items. They may need to be insured separately.

Take a Picture

Besides the list, you can take pictures of rooms and important individual items. On the back of the photos, note what is shown and where you bought it or the make. Don't forget things that are in closets or drawers.

Videotape It

Walk through your house or apartment videotaping and describing the contents. Or do the same thing using a tape recorder.

Use a Personal Computer

Use your PC to make your inventory list. Personal finance software packages often include a homeowners room-by-room inventory program.

Storing the List, Photos and Tapes

Regardless of how you do it (written list, floppy disk, photos, videotape or audio tape), keep your inventory along with receipts in your safe deposit box or at a friend's or relative's home. That way you'll be sure to have something to give your insurance representative if your home is damaged. When you make a significant purchase, add the information to your inventory while the details are fresh in your mind.

You need enough insurance to cover the following:

1. The structure of your home
2. Your personal possessions
3. The cost of additional living expenses if your home is damaged and you have to live elsewhere during repairs
4. Your liability to others

The Structure

You need enough insurance to cover the cost of rebuilding your home at current construction costs. Don't include the cost of the land. And don't base your rebuilding costs on the price you paid for your home. The cost of rebuilding could be more or less than the price you paid or could sell it for today.

Some banks require you to buy homeowners insurance to cover the amount of your mortgage. If the limit of your insurance policy is based on your mortgage, make sure it's enough to cover the cost of rebuilding. (If your mortgage is paid off, don't cancel your homeowners policy. Homeowners insurance protects your investment in your home.)

For a quick estimate of the amount of insurance you need, multiply the total square footage of your home by local building costs per square foot. To find out construction costs in your community, call your local real estate agent, builders association or insurance agent.

Factors that will determine the cost of rebuilding your home:

• Local construction costs
• The square footage of the structure
• The type of exterior wall construction -- frame, masonry (brick or stone) or veneer
• The style of the house (ranch, colonial)
• The number of bathrooms and other rooms
• The type of roof and materials used
• Other structures on the premises such as garages, sheds
• Fireplaces, exterior trim and other special features like arched windows
• Whether the house, or parts of it like the kitchen, were custom built
• Improvement to your home - adding a second bathroom, enlarging the kitchen or other additions that have added value to your home

Standard policies provide coverage for disasters such as damage due to fire, lightning, hail, explosions and theft. They do not cover floods, earthquakes or damage caused by lack of routine maintenance.

Flood insurance is available from the Federal Insurance Administration (http://www.fema.gov) and earthquake coverage is available from private insurance companies or, in California, also through the California Earthquake Authority.

Replacement cost policies

Most policies cover replacement cost for damage to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality. There is no deduction for depreciation -- the decrease in value due to age, wear and tear, and other factors.

If you purchase a flood insurance policy, coverage for the structure is available on a replacement cost basis.

Guaranteed or extended replacement cost coverage

After a major hurricane or a tornado, building materials and construction workers are often in great demand. This can push rebuilding costs above policy limits, leaving you without enough money to cover the bill. To protect against such a situation, you can buy a policy that pays more than the policy limits.

An extended replacement cost policy will pay an extra 20 percent or more above the limits, depending on the insurance company. A guaranteed replacement cost policy will pay whatever it costs to rebuild your home as it was before the fire or other disaster.

Building codes

Building codes are updated periodically and may have changed significantly since your home was built. If your home is badly damaged, you may be required to rebuild your home to meet new building codes. Generally, insurance policies (even a guaranteed replacement cost policy) won't pay for the extra expense of rebuilding to code. Many insurance companies offer an Ordinance or Law endorsement that pays a specified amount toward these costs. (An endorsement is a form attached to an insurance policy that changes what the policy covers.)

Inflation guard

Consider adding an inflation guard clause to your policy. This automatically adjusts the dwelling limit when you renew your policy to reflect current construction costs in your area.

Older homes

If you own an older home, you may not be able to buy a replacement cost policy. Instead, you may have to buy a modified replacement cost policy. This means that instead of repairing or replacing features typical of older homes, like plaster walls and wooden floors, with similar materials, the policy will pay for repairs using the standard building materials and construction techniques in use today.

Insurance companies differ greatly in how they insure older homes. Some won't insure older homes for the replacement cost because of the expense of re-creating special features like wall and ceiling moldings and carvings. Other companies will insure older homes for the replacement cost as long as the dwelling is in good condition.

If you can't insure your home for the replacement cost or choose not to do so -- in some cases, the cost of replacing a large old home is so high that you might not want to replace it with a house of the same size -- make sure the limits of the policy are high enough to provide you with a house of acceptable size and quality.

Your Personal Possessions

Most homeowners insurance policies provide coverage for your personal possessions for approximately 50% to 70% of the amount of insurance you have on the structure or "dwelling" of your home. The limits of the policy typically appear on the Declarations Page under Section I, Coverages, A. Dwelling.

To determine if this is enough coverage, you need to conduct a home inventory. This is a detailed list of everything you own and information related to the cost to replace these items if they were stolen or destroyed by a disaster such as a fire. If you think you need more coverage, contact your agent or insurance company representative and ask for higher limits for your personal possessions.

Replacement cost or actual cash value

You can insure your possessions in two ways. You can either insure your belongings for their actual cash value or their replacement cost.

A cash value policy pays the cost to replace your belongings minus depreciation. A replacement cost policy, on the other hand, reimburses you for the cost to replace the item.

Suppose, for example, a fire destroys a 10-year-old TV set in your living room. If you have a replacement cost policy for the contents of your home, the insurance company will pay to replace the TV set with a new one. If you have an actual cash value policy, it will pay only a percentage of the cost of a new TV set because the TV has been used for 10 years and is worth a lot less than its original cost. Some replacement cost policies also replace the item and deliver it to you.

Generally, the price of replacement cost coverage is about 10% more than actual cash value. If you need a flood insurance policy, you can purchase flood insurance for your belongings. It is only available, however, on an actual cash value basis.

Insuring expensive items with floaters/endorsements

There may be limits on how much coverage you get for expensive items such as jewelry, silverware and furs. Generally, there is a limit on jewelry for $1,000 to $2,000. You should ask your agent or look it up in your policy. This information is in Section I, Personal Property, Special Limits of Liability. Insurance companies may also place a limit on what they'll pay for computers.

If the limits are too low, consider buying a special personal property floater or an endorsement. These allow you to insure these items individually or as a collection. With floaters and endorsements, there is no deductible. You are charged a premium based on what the item (or collection) is, where you live and its dollar value.

You can determine the value by providing your agent with a recent receipt or getting the item or collection appraised.

Additional Living Expenses After a Disaster

This is a very important feature of a standard homeowners insurance policy. This pays the additional costs of temporarily living away from your home if you can't live in it due to a fire, severe storm or other insured disaster. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt.

Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20% of the insurance on your house. Some companies will even sell you a policy that provides you with an unlimited amount of loss of use coverage, for a limited amount of time.

If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

You should talk to your agent or company to make sure you know exactly how much coverage you have and how long the coverage will be in effect. In most cases, you can increase this coverage for an additional premium.

Liability to Others

This part of your policy covers you against lawsuits for bodily injury or property damage that you or family members cause to other people. It also pays for damage caused by pets. It pays for both the cost of defending you in court and for any damages a court rules you must pay.

Generally, most insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available. Increasingly, it is recommended that homeowners consider purchasing at least $300,000 to $500,000 worth of coverage of liability protection.

Umbrella or excess liability

You should buy enough liability insurance to protect your assets. If you own property and/or have investments and savings that are worth more than the liability limits in your policy, you may consider purchasing an excess liability or umbrella policy.

Umbrella or excess liability policies provide extra coverage. They start to pay after you have used up the liability insurance in your underlying home (or auto) policy. An umbrella policy is not part of your home policy. You have to purchase it separately. In addition to providing a higher dollar amount, they offer broader coverage. You are covered for libel, slander, and invasion of privacy. These things are not covered under standard homeowners or auto policies.

The cost of an umbrella policy depends on how much underlying insurance you have and the kind of risk you represent. The greater the underlying liability coverage, the cheaper the policy. This is because you would be the less likely to need the additional insurance. Most companies will require a minimum of $300,000 on your home and your car, if you own one.

An Insurance Company Uses the Following to Determine the Price of Your Policy:

• The square footage of the house and any additional structures.
• Building costs in your area.
• Your home's construction, materials and features.
• Amount of crime in your neighborhood.
• The likelihood of damage from natural disasters, such as hurricanes and hail storms.
• The proximity of your home to a fire hydrant (or other source of water) and to a fire station, whether your community has a professional or volunteer fire service and other factors that can affect the time it takes to put out fires.
• The condition of the plumbing, heating and electrical system.
• If you rent your home or own a condo/co-op, your insurer will not consider the size of the dwelling or building costs. However, it will take into account factors that make damage to your possessions more likely.

See if You Can Get Group Coverage

Your employer offers a special program through PersonalPlans®. Check to see if the home insurance can give you a better deal than you can find elsewhere.

Buy Your Home and Auto Policies From the Same Insurer

Most companies that sell homeowners insurance also sell auto and umbrella liability insurance. (An umbrella liability policy will give you extra liability coverage.) Some insurance companies will reduce your premium by 5% to 15% if you buy two or more insurance policies from them. Check with the PersonalPlans® home insurance company to see if you qualify for multi-policy discounts.

Raise Your Deductible

A deductible is the amount of money you have to pay toward a loss before your insurance company starts to pay a claim. The higher your deductible, the more money you save on your premium. Consider a deductible of at least $500. If you can afford to raise it to $1,000, you may save as much as 25%.

If you live in a disaster-prone area, your insurance policy may have a separate deductible for damage from major disasters. If you live near the coast in the East, you may have a separate windstorm deductible, if you live in a state vulnerable to hail storms, you may have a separate deductible for hail, and if you live in an earthquake-prone area, your earthquake policy has a deductible.

Make Your Home More Disaster-Resistant

Find out from your insurance agent or company representative what you can do to make your home more resistant to windstorms and other natural disasters. You may be able to save on your premiums by adding storm shutters and shatter-proof glass, reinforcing your roof or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.

Don't Confuse What You Paid for Your House With Rebuilding Costs

The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you'll pay a higher premium than you should.

Ask About Discounts for Home Security Devices

You can usually get discounts of at least 5% for a smoke detector, burglar alarm or dead-bolt locks. Some companies may cut your premiums by as much as 15% or 20% if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. These systems aren't cheap and not every system qualifies for a discount. Before you buy one, find out what kind your insurer recommends, how much the device would cost and how much you'd save on premiums.

Seek Out Other Discounts

Many companies offer discounts, but they don't all offer the same discount or the same amount of discount in all states. Ask your agent or company representative about discounts available to you. For example, if you're at least 55 years old and retired, you may qualify for a discount of up to 10% at some companies. If you've completely modernized your plumbing or electrical system recently, some companies may also provide a price break.

Review Policy Limits and the Value of Your Possessions Annually

You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, you'll want to reduce or cancel your floater (extra insurance for items whose full value is not covered by standard homeowners policies) and pocket the difference.

Look for Private Insurance if You are in a Government Plan

If you live in a high-risk area -- one that is especially vulnerable to coastal storms, fires, or crime -- and you've been buying your homeowners insurance through a government plan, find out from insurance agents, company representatives or your state department of insurance which insurance companies might be interested in your business. You may find there are steps you can take that will allow you to buy insurance at a lower price in the private market.

When You're Buying a Home, Consider the Cost of Homeowners Insurance

The price you pay for homeowners insurance depends in part on the cost of rebuilding your home and the likelihood that it will be damaged by natural disasters or burn down. You may pay less if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your home's electrical, heating and plumbing systems are less than 10 years old. If you live in the East, consider a brick home because it's more wind-resistant. If you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster. Choosing wisely could cut your premiums by 5% to 15%.

Remember that flood insurance and earthquake damage are not covered by a standard policy. If you buy a house in a flood-prone area, you'll have to pay for a flood insurance policy that costs an average of $400 a year. The Federal Emergency Management Agency provides useful information on flood insurance on its Web site at http://www.fema.gov/business/nfip/. A separate earthquake policy is available from most insurance companies. The cost of the coverage will depend on the likelihood of earthquakes in your area and the construction features.

If you have questions about insurance for any of your possessions, be sure to ask your agent or company representative. For example, if you run a business out of your home, be sure you have adequate coverage. Most policies cover business equipment in the home, but only up to $2,500 and they offer no business liability insurance.

An adjuster will inspect the damage to your home and offer you a certain sum of money for repairs. The first check you get from your insurance company is often an advance against the total settlement amount. It is not the final payment.

If you're offered an on-the-spot settlement, you can accept the check right away. Later on, if you find other damage, you can "reopen" the claim and file for an additional amount. Most policies require claims to be filed within one year from the date of disaster. Check with your state department of insurance.

When both the structure of your home and personal belongings are damaged, you generally receive two separate checks from your insurance company, one for each category of damage. You should also receive a separate check for additional living expenses that you incur while your home is being renovated.

Structure

If you have a mortgage on your house, the check for repairs will generally be made out to both you and the mortgage lender. As a condition of granting a mortgage, lenders usually require that they are named in the homeowner's policy and that they are a party to any insurance payments related to the structure.

The lender gets equal rights to the insurance check to ensure that the necessary repairs are made to the property in which it has a significant financial interest. This means that the mortgage company or bank will have to endorse the check. Lenders generally put the money in an escrow account and pay for the repairs as the work is completed. You should show the mortgage lender your contractor's bid and let the lender know how much the contractor wants up front to start the job. Your mortgage company may want to inspect the finished job before releasing the funds for payment to the contractor.

Some construction firms require you to sign a form that allows your insurance company to pay the firm directly. Make certain that you're completely satisfied with the repair work and that the job has been completed before you let the insurance company make the final payment. Remember, you won't receive a check for the repair job. The construction firm will bill your insurance company directly and attach the "direction to pay" form you signed.

Bank regulators have guidelines for lenders to follow after a major disaster. If you have any questions, contact your state banking department.

Personal Belongings

The first step is to add up the cost of everything inside your home that has been damaged in the disaster. Now is the time to review your personal inventory, to help you remember the things you may have lost. If you don't have an inventory, look for photographs or videotapes that picture the damaged areas. For expensive items, you may also contact your bank or credit card company for proof of purchase. When making your list, don't forget items that may be damaged in out of the way places such as the attic or tops of closets.

If you have a replacement cost policy, you will be reimbursed for the cost of buying new items. An actual cash value policy will reimburse you for the cost of the items minus depreciation. Regardless of which type of policy you have, the first check will be calculated on a cash value basis. Most insurance companies will require you to purchase the damaged item before they will reimburse you for its full replacement cost.

If you have financed your home, your bank may have received a check for both repairs to your home and your possessions. If you don't get a separate check from your insurance company for your belongings, ask the lender to send the money to you immediately.

If you have a replacement cost policy, you may be required to buy replacements for items damaged before your insurance company will compensate you. Make sure to keep receipts as proof of purchase.

If you decide not to replace some items, in most cases you'll be paid the depreciated or actual cash value of the items that were damaged. You don't have to decide what to do immediately.

Your insurance company will generally allow you several months from the date of the cash value payment to replace the item. Ask your agent how many months you are allowed before you must replace your personal possessions. Some insurance companies supply lists of vendors that can help replace your property.

Additional Living Expenses

Your check for additional living expenses should be made out to you and not your lender. This money has nothing to do with repairs to your home and you may have difficulty depositing or cashing the check if you can't get the mortgage lender's signature. This money is designed to cover your expenses for hotels, car rentals and other expenses you may incur while your home is being fixed.

Options for Rebuilding

If your home has been destroyed, you have several options:

1. Rebuild your home on the same site. The amount of money you'll have to rebuild your home depends on both the type of policy you bought and the dollar limit specified on the first "declarations" page of your policy. Generally, you are entitled to the replacement cost of your former home, providing that you spend that amount of money on the home you rebuild. Remember, your insurance policy will pay to rebuild your home as it was before the disaster. It won't pay to build a bigger or more expensive house. A similar rule applies to repairs.
2. Decide not to rebuild or to rebuild in a different location. The amount you'll get from your insurer will be determined by your policy, state law, and what the courts have ruled on this matter. If you decide not to rebuild, review your policy and ask your insurance agent or company representative what the settlement amount will be.

Replacement Cost and Actual Cash Value

Replacement cost provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation -- the decrease in value due to age, obsolescence, wear and tear and other factors. An actual cash value policy pays you the amount needed to replace the item minus depreciation.

Suppose, for example, a tree fell through the roof onto your eight-year-old washing machine. If you had a replacement cost policy for the contents of your home, the insurance company would pay to replace the old machine with a new one. If you had an actual cash value policy, the company would pay only a percentage of the cost of a new washing machine because a machine that has been used for eight years would be worth less than its original cost.

Suppose, also, that the tree damaged your 15-year-old roof so badly that it had to be completely replaced. If you had a replacement cost policy, the insurance company would pay the full cost of installing a new roof. If you had an actual cash value policy, it would pay a smaller percentage of the cost of replacing it.

Extended and Guaranteed Replacement Cost

If your home is damaged beyond repair, a typical homeowners policy will pay to replace it up to the limits of the policy. When the value of your insurance policy has kept up with increases in local building costs, a similar dwelling can generally be rebuilt for an amount that is within the policy limits.

Some insurance companies offer a replacement cost policy that will pay a certain percentage over the limit to rebuild your home -- 20% or more, depending on the insurer -- so that if building costs go up unexpectedly, you will have extra funds to cover the bill. These are called extended replacement cost policies. A few insurance companies still offer a guaranteed replacement cost policy that pays whatever it costs to rebuild your home as it was before the disaster. But neither a guaranteed or extended replacement cost policy will pay for a house that's better than the one that was destroyed.

Mobile Home Policies

If you own a mobile home, you may have a policy based on replacement cost, actual cash value or, in a few cases, a "stated amount." With a stated amount policy, the maximum amount you receive if your home is destroyed is the amount you agreed to when the policy was issued. The depreciation in the value of your home is not considered in the settlement. If you opt for the stated amount, update your policy annually to make sure that the stated amount will cover the realistic cost of replacing your mobile home. Check with local mobile home dealers to find out what similar homes sell for now.

If You are Unsatisfied With How Your Insurance Company is Handling Your Claim, You Have Several Options:

Talk to the company representative who sold you the policy

Let the agent know that you are dissatisfied and explain the specifics of your problem.

Contact the claims manager of the company

Provide a written explanation of your problem with copies of supporting documentation. Remember to send only a copy and not any original documentation. If you are insured with a smaller company, consider writing directly to the president. Going to the top can sometimes speed the process.

Contact your state insurance department

Insurance is a regulated industry and your state department of insurance should be able to help you resolve your problem.

Call the National Insurance Consumer help line

This toll-free telephone service (800-942-4242) can help you work with your insurance company to solve the problem.

Consult an attorney

If you have tried all four of the above tips and still can't resolve the claim, you may want to talk to an attorney. You may have to pay a consultation fee for your initial visit, so make sure you know how much this will cost. Meet with an attorney that has solid references or get the name of someone from your local bar association. Prepare for the visit by bringing a copy of your insurance policy and other relevant documents. Get the fee structure in writing before you decide to pursue the case.

They know that people who have lost their homes and valuables may not be thinking clearly. If you have suffered this type of loss, don't make any rash decisions. Talk to your insurance agent, who may recommend service providers in your area.

Basic Guidelines for Hiring Service Providers:

Roofers and builders

1. Don't be rushed into signing a contract with any company. Instead, collect business cards and get written estimates for the proposed job.
2. Beware of building contractors that encourage you to spend a lot of money on temporary repairs. Payments for temporary repairs are covered as part of the total settlement. If you pay a contractor a large sum for a temporary repair job, you may not have enough money for permanent repairs. In most cases, you should be able to make the temporary repairs yourself. Ask your insurance agent. And remember to keep receipts.
3. Investigate the track record of any roofer, builder or contractor that you consider hiring. Look for professionals that have a solid reputation in your community. You can call your Better Business Bureau for help. Also, get references and never give anyone a deposit until after you have thoroughly researched their background.

A common fraud scheme is for a "so-called" contractor to convince a homeowner that a large deposit must be provided before repair work can begin. Frequently, the job will be started, but not completed. Unfortunately, these con artists are never seen or heard from again.

Public adjusters and attorneys

1. Don't make any rash decisions about hiring someone to handle your claim. Be especially wary of individuals who go door-to-door soliciting business in the aftermath of a catastrophe. Most importantly, don't let anyone scare you into signing a contract. You don't want to be victimized by someone who comes into town, hoping to make a fast buck. You could end up forfeiting a significant portion of your insurance dollars.
2. Before hiring a public adjuster or an attorney, try to settle your claim directly with your insurance company. Your insurer provides an adjuster at no charge to you. Ask your insurance agent or company representative to help you with your claim and don't be afraid to ask questions. If you decide to work directly with your insurer, you still have the right to hire a third-party professional to help you.
3. If your claim is complicated and you want to hire a public adjuster or attorney, make sure that person is qualified to handle your case. Ask your friends, relatives or business associates for the names of well-regarded professionals in your community. Also, call the state department of insurance regarding a public adjuster and your state or county bar association about a prospective attorney.
4. Understand that you will have to pay a public adjuster 15% and an attorney as much as 30% of your total claim settlement.