One of the last steps before you set up your closing your Michigan mortgage person will ask you to get 1 year of homeowners insurance paid up in full on your new Livonia home.

Here are 7 questions to ask your insurance agent

1.)  What deductible will you have.  The larger the deductible the lower the cost of the policy.  The average deductible is between $500 and $1000

2.)  Look for exclusions to coverage . For example, most insurance policies do not cover flood  damage as a standard item. If a flood comes (water from a sewer backup is part of this) you are not covered under a normal policy.  These coverages must be bought separately.  Usually water damage is only covered by a piper bursting in the house.  Sewer backups, rivers over flowing and outside water coming in the home are not covered in most policies.

3.)  Look for dollar limitations on claims . Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for jewelry, collectibles, firearms (to name a few) unless items are insured separately.   Usually you need a seperate rider.  Business equipment stored on the property is sometimes excluded.

4.)  Understand replacement cost . If your home is destroyed you'll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $250,000 and it costs $295,000 to replace it, you'll only receive $250,000.   Most policies now days are for 100% replacement cost but be sure to check.  You don't want your new Livonia home to be underinsured.

5.)   Understand actual cash value . If you choose not to replace your home when it's destroyed, you'll receive replacement cost, less depreciation. This is called actual cash value. 

6.)  Understand liability . Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it's sufficient if you have significant assets.   In other words if you are rich you need to have a bigger liability limit.  You will have to pay extra for it but it may be worth it if somebody gets hurt on your property.

7.)  Ask about what will bring down the price of the policy.  Sometimes insuring your cars along with the house may bring down the price.  Being a non smoker sometimes does. Having an alarm system sometimes does.  Ask your Metro Detroit insurance agent.  I have 5 different insurance agents I know.  Call me for their numbers.

Insurance rates change from year to year.   One year State Farm may have the best rate, next year it may be AllState or Citizens that has the best rate.  They all figure it a little different.  So when you buy Livonia real estate shop your insurance around you may be surprised at the price differences.