It's easy to take for granted the tools we rely on to protect ourselves, from an umbrella to fend off a rain shower to anti-lock brakes that prevent skidding on a wet road. Like umbrellas and anti-lock brakes, homeowner's insurance often goes underappreciated. Once it's in place, we often forget about it unless a misfortune happens. Apparently, many Americans forget about homeowner's insurance altogether. According to results of a nationwide survey released in May 2005 by New York City-based advertising agency JWT, only 53 percent of 2,568 respondents have homeowner's insurance. "Having appropriate coverage in place will protect the single largest investment that most people make: their homes," says Tom Milana, chief executive officer of Boca Raton, Fla.-based Milana Real Estate Investment Group. "Without sufficient homeowners insurance a person can lose everything they have, says Diana Brodman Summers, author of How To Buy Your First Home (Sourcebooks, 2005). "Considering the small premium paid for most policies, insurance is a great buy for the dollar." Most people want the peace of mind that their insurance will "put them back" to the same standard they enjoyed before suffering a loss, says John Luttrell, agriculture account executive with Smith-Feike-Minton Insurance, Wilmington, Ohio. "This not always a guarantee," says Luttrell. "Insurance coverages change over the years, so updating your policy is also a good idea." Whether you're shopping for your first policy or haven't reviewed your coverage in years, it's important to scrutinize your homeowner's insurance carefully, say the experts. Find the right company According to Milana, the single most important step in shopping for homeowner's insurance is selecting an agency or direct carrier that offers you a wide variety of choices and one that is responsive to your service and claims needs. Compare prices among several companies. Remember that price is important, but so is reputation and speed and quality of service if you ever need to make a claim. Opt for a reputable, well-known insurer. Ask friends and family members for a referral. The agency should be able to share with you the financial standings of the carriers and underwriters it represents and supply ratings when applicable, says Milana. Company ratings should be at least a B+ or higher and be an admitted carrier. AM Best, Standard & Poor, Demotech, and Weiss are well-known rating services. What to cover? One of the first choices you'll need to make is deciding if you want an insurance policy that pays losses based on actual cash value or on replacement cost, says Summers. "If you select actual cash value then you will be paid the depreciated value of the damaged property for any loss. If you select replacement cost, you will be reimbursed the amount needed to replace the property with something of similar type and quality at the current market price," she says. To properly evaluate a home's replacement cost, "you first must be working from a recent appraisal," Milana says. "Taking the home's value, less the land value, will give you the appraiser's estimate of the building costs. This helps the agent validate his or her calculations as to the estimate of value." Another key decision is between an "all risks" insurance policy or a "named perils" insurance policy. All risks policies cover losses due to any peril except those specifically excluded in the insurance policy. Named perils policies cover losses due only to the perils listed in the insurance policy. A homeowner also must determine the amount of policy limits for insurance coverage. Your policy limit "should not be less than 80 percent of the replacement cost of your home," says Summers. Many homeowners mistakenly believe that they should ensure for the amount they paid to purchase their home. "This is usually too much coverage and too much cost to the client," says Milana. "The carrier wants to ensure the cost to rebuild, not the market value, which includes land, landscaping, amenities from the development, etc." Too little coverage could leave the client a co-insurer' at the time of a claim, Milana notes. "Because property values continue to rise, it is easy to not maintain sufficient coverage on your home to replace damage or rebuild," Summers says. He recommends that homeowners review their insurance annually. Homeowners can choose to pay more for special coverage for events such as floods or earthquakes (usually not included in a basic policy) and additional personal property insurance: jewelry, garage contents, computer equipment and any other possession that is not a permanent part of your dwelling. Money-saving tips If you're on a tight budget, consider increasing your insurance deductible, which will reduce your premium, says Luttrell. One of the best ways to get a low quote and decent coverage in homeowners insurance is to qualify for available discounts offered by the insurance company, suggests Summers. Discounts may be available if you have your car or another structure insured with the same company. Other reductions can hinge on certain safety devices in the home, such as deadbolt locks, smoke detectors, alarm systems or exterior fire retardant materials. If you smoke, consider quitting. Smoking leads to thousands of residential fires every year, and many insurers will reduce insurance premiums for non-smokers.