Are you ready to buy a new home insurance plan? You might need it for your first home purchase. However, you might need a new plan because you're unhappy with your current one. In either case, you should understand a few key factors about home insurance. Keep reading this guide to learn these.

You must know your home's replacement costs

First, how much is your home worth? You probably have a general idea about this, but do you know how much it would cost to rebuild it? You need to know this number, which is the amount you should give the insurance company. How much would you have to spend to replace your home if you lost it? Knowing this amount can help you insure it for the correct amount.  

Keep a detailed inventory

Secondly, how much are your belongings worth? Most people don't know this amount because they don't keep an inventory. However, it would help if you kept a detailed inventory. You can write it on paper or make a spreadsheet. You might also take videos of your things with your phone. The goal is to determine how much your things are worth to have enough coverage with your home insurance plan.

Learn the risks your house has

Next, the insurance company considers the risks that come with your house. They base your home insurance premiums on several things, including the risks. For example, you'll pay higher rates if you live in an area with a high crime rate. You'll also pay higher rates if your area is prone to storm damage claims. Conversely, a house with low risks yields lower premiums.

Understand what the most common policies offer

Finally, you should learn the differences between an HO-2 and HO-3 plan. While you can choose other plan types, these are two of the most common ones. An HO-2 home insurance plan protects your home against the perils stated in the policy. So you can know exactly what coverage you have. On the flip side, an HO-3 plan protects your home against all perils unless the plan has stated exclusions. It's common for HO-3 plans to exclude damage from earthquakes, hurricanes, and floods.

Contact an insurance agent

Are you ready to get a home insurance quote? If so, contact an insurance agent. You must provide the agent with some information about yourself and your home. Then, they'll give you a quote for insurance coverage. 

For more information about home insurance, contact a local company.