Homeowners insurance is an absolute necessity. That’s not just because you need to protect what is probably the single largest investment that most people ever make, but the bank or mortgage company that is financing the home will require homeowners insurance as well.

If you are shopping for a new home, start the process of finding a homeowners insurance company as early in the process as possible. Last minute decisions usually result in higher premiums and you may be in such a rush that you overlook important coverage items that could be missing from your policy.

Your personal credit rating matters as much to homeowners insurance companies as it does to mortgage companies and banks. The better your credit rating, the lower the premiums will be. Know what your credit score is and take steps to clean up any blemishes before you apply for homeowners insurance.

Just like you have a personal credit history, most houses have an insurance history. There are several national databases that house homeowners insurance claims. These claims are tracked by address. If the home you are thinking of buying has had too many claims in the past, even before you owned the home, you’ll end up paying a higher premium. You can check your home’s claim history at websites like www.ChoicePoint.com

Just like auto and health insurance, you can lower your homeowners insurance rates by opting for a higher deductible. A $1,000 deductible can save as much as 25% of your annual premium.

Homeowners insurance companies also offer discounts for certain things like the presence of burglar and fire alarms, fire sprinkler systems, hurricane-proofing for windows, doors and roofs, as well as other features that you may not think about. Ask your homeowners insurance agent for a complete list of all discounts that you may qualify for. Often times you can save even more money by having the same insurance company insure your automobiles and your home.

Homeowners insurance does not cover damage from flooding. If you live in a flood zone, or even if you don’t but you want to be protected from unexpected flooding, you’ll need to buy Federal Flood insurance from an authorized homeowners insurance agent.

Make sure that you have enough coverage to completely rebuild your home at current prices. Look for the term “replacement value” in your policy. Don’t forget to increase you coverage as the value of your home increases.