What you don’t know about home insurance could cost you plenty

Shop smart CONSUMER REPORTS

We buy homeowners insurance to protect against the high drama of our greatest fears: tornadoes ripping off the roof, fire racing up the stairs or floodwaters lapping at the front porch. But in reality, the worst rarely happens.

As a result, most of us don't spend a lot of time thinking about homeowners insurance. We get the coverage when we buy our house and then — unless and until something happens — pretty much put it out of our heads.

Here are three insurance surprises: 1. You may be paying

too much. Many of the respondents to a recent survey Consumer Reports conducted of more than 85,000 subscribers stick with the same company for 15, 20, 30 or more years and seldom shop around for new policies. About 9 percent switched insurers in the previous three years, and more than half reported finding a better price. Homeowners insurance isn't as price competitive as auto insurance, but you can still save hundreds to more than $1,000 per year in premiums by shopping around.

Homeowners insurance requires a careful assessment of your risks and coverage needs. Work with an independent agent who can compare premiums and isn't beholden to just one company. Direct-to-consumer sellers, such as Geico, Farmers and USAA, and captive-agent companies, such as Allstate and State Farm, only offer their own brand. You can find an independent agent at TrustedChoice.com, a website run by the Independent Insurance Agents and Brokers of America, a trade association.

2. You may not be covered enough. Some homeowners also don't realize that a standard policy doesn't cover everything. For example, 56 percent incorrectly think that flood insurance is covered by a standard policy, according to Princeton Survey Research Associates International. Work with your agent to buy separate flood and earthquake protection. You may also need a separate hurricane policy if you live in a high-risk zone.

Add-on policies are a must to cover sewer backups or the extra cost of rebuilding according to the latest codes and ordinances. A typical policy covers the structure and outbuildings; the contents of the house; personal liability if you, your family or pet cause damages to others; and additional living expenses if your house is so badly damaged you need a temporary place to live.

3. Don't worry too much about filing a small claim. Some people don't make claims when they have a small loss for fear it will jack up their premiums and cost them more over time. About 22 percent of the survey respondents said they chose not to file a claim for this reason.

But the survey also found that 57 percent who filed claims of less than $5,000 saw no premium increase. Home insurers might raise rates by tacking on a surcharge if the loss is above a certain amount, but the thresholds and surcharges vary by company, type of loss and number of claims filed in a given period.

To learn more, visit ConsumerReports.org.