Homeowner’s insurance is something most people agree is a necessity. Having said that, many homeowners fail to read and understand their policy and often have no real idea what is covered and what is not. Having adequate homeowner’s insurance does more than protect your home in the event of physical damage or theft. It gives you peace of mind. Should something unfortunate happen, the last thing you want to worry about is money. Use these five homeowner insurance tips to help you get a policy that suits your needs and your wallet perfectly.

1. Make it a point to know what your policy covers.

If you don’t know what your homeowner’s insurance policy covers, make it a point to find out. Don’t wait until something bad happens and then hope it’s covered. Basic policies cover things like fire and storm damage, vandalism and theft. It also provides liability coverage in the event that someone gets hurt while visiting your property. Should you get temporarily misplaced from your home for some reason, your homeowner’s insurance policy pays shelter costs so you don’t have to pay outrageous hotel bills until you can get back home.

Homeowner’s insurance policies also cover things outside your home, too. For instance, if an airline loses your laptop, or something is stolen from your vehicle, your homeowner’s insurance will likely cover these items.

2. Understand what the policy doesn’t cover.

While your homeowner’s insurance policy covers a lot of things, it does not cover some rather important things at the same time. Not understanding what your policy doesn’t cover can cause great financial loss should anything such as earth movement (earthquake, landslide, sinkhole), war, power failure, government action, nuclear damage, faulty repair or bad workmanship, flooding*, or bad zoning occur and your policy doesn’t provide adequate protection.

*Flooding and water damage can be questionable. Standard homeowner’s insurance policies cover water damage caused by water falling from above. For instance, a leaky or burst water pipe or rainfall damage is covered, whereas ground flooding or sewer backup is not. If you live in an area that is prone to flooding, you must purchase supplemental coverage in order to be covered in the event your home is damaged by flooding.

3. Shop around.

When deciding on a homeowner’s insurance policy, it pays to not only shp for the best price, but also for the best service. Of course you want to pay as little as possible for your policy, but dealing with an agent who is empathetic and friendly makes a bad situation a little less terrible. Be sure to check reviews online of the company and agent you plan to do business with, or ask friends and/or family members for recommendations.

4. Keep records of everything.

Many a claim against a homeowner’s insurance policy gets denied because the holder fails to provide adequate documentation. In the event of damage or loss, you must document everything that takes place. Write down dates, times and names of people you talk to who have anything to do with the process. Keep every receipt, estimate contract and appraisal in a safe, secure location. If you don’t have a safe to keep paper documents, consider using a digital service such as Dropbox.

5. Don’t wait to file a claim.

Many homeowner’s insurance policies have time limitations in which to file claims, especially when waiting could potentially make damage worse. For example, if you notice water damage from a leaky pipe, make a claim right away so it can be fixed. If you wait too long, a small bit of water damage will get worse, resulting in mold and mildew. Your insurance company could decide you waited too long and refuse to pay for the repairs.