Homeowner's insurance is the backbone of our real estate properties. Housing markets are some of the most consistent in the nation, with rock solid investment opportunities all around unlike the volatile stock market. Since many companies are now providing home insurance, it is important to select the right policy without spending a fortune. As with shopping around, you need to conduct some research. Your research should involve striving to keep your premiums and deductibles as low as possible. One way to do this is by not insuring the land your house sits on.

Insuring your land is only grounds for over-insuring. To start, your land is not exposed to thieves, property fires, or other conditions covered by your homeowners insurance policy. When picking the right homeowners insurance, the value of the land should not be taken into consideration. Besides, your land cannot simply disappear. This is the reason why insurance companies don't insure the portion of the home's value that represents the property.

However, this doesn't erase the fact land can disappear altogether. In cases where devastating natural disasters occur like an earthquake or a tsunami, there is another type of insurance involved which is bought separately from a typical homeowners insurance policy which covers these costs. Keep in mind many lenders still try to persuade home buyers to insurance the entire loan amount including land. For instance, if your lender is financing you with a $400,000 mortgage on a $400,000 house, part of that is going towards insuring the land. Always make sure the amount required to build the house in case of danger is the amount insured.

With that being said, what exactly is covered by homeowners insurance? Homeowners insurance covers the costs of replacing your home and the items within in case they get damaged. Along with not insuring the land, another excellent idea is to look around for the best homeowner's insurance quotes. Make sure you shop around and investigate the various insurance companies that are out there. Their quotes will run the gamut, although each lay their basic criteria on the value/age of your home, previous claim history, and crime statistics in your area. It is common knowledge that rates for homeowners insurance don't vary drastically as ratings are based on the same factors. As with any insurance company, make sure to choose one with an excellent track record. In case of a disaster, you don't want a company to disappear. Beware of overly cheap policies as well.

By not insuring the land in homeowners insurance, you can save money that could be spent elsewhere.