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Homeowners insurance protects more than you might think

Your home is your castle and, to push the analogy to the limit, homeowners insurance is the knight who swoops in to protect it in times of distress. Well, that's how it's supposed to work, anyway. Like just about everything insurance-related, shopping for a homeowners policy can be confusing, time consuming and downright frustrating.

Most home insurance policies cover four things. A standard homeowners policy covers damage to your house and detached structures, such as sheds, from situations like fires and theft. Your personal possessions will be covered up to a specified dollar limit, and most policies include liability coverage to pay for property damage or bodily injury to others. Finally, hotel costs, meals and other incidentals are usually covered if you have to live elsewhere while your house is being repaired.

Homeowners and renters require slightly different policies. The majority of homeowners opt for a policy known as HO-3, or a "special" policy, which covers several common perils; fire, hail damage, vandalism, theft and explosions are common examples. This is also the case for other types of home-insurance policies, so what makes HO-3 special? It covers every situation unless the policy specifically excludes it. Common exclusions include floods, earthquakes and pest damage. (Condo owners and owners of older homes require slightly different policies with special considerations of their own.)

Renters insurance, also known as HO-4 coverage, protects against many of the same perils as homeowners insurance. Like homeowners insurance, renters insurance covers your possessions and provides liability coverage in the event of situations such as fire or theft. Also, like homeowners policies, renters insurance generally pays for living expenses if your unit becomes uninhabitable. The major difference is that it doesn't cover the structure itself, which is your landlord's responsibility.

For many homeowners, smaller companies may be a better bet. Flashy television ads aren't in the budget for all but the biggest home insurance companies, but bigger does not necessarily equal best. Some of the most highly rated home insurers are smaller. Small companies may surprise you with low rates, which they need to offer to stay competitive. They may also offer a more personal business approach, especially if you form a relationship with a local agent. However, while some smaller insurers still have a national reach, many only accept policyholders in certain states. Smaller insurers may also be pickier about their policyholders, accepting only those who they think pose the lowest risk of filing a claim.

Military families have some additional options and considerations. A handful of companies cater exclusively to active-duty military, veterans and their families. Some insurers may offer coverage options and discounts exclusively for servicemen and women. Whatever they choose, military families will want to ensure their policies don't have a vacancy clause that voids their coverage during deployment, cautions the National Association of Insurance Commissioners (NAIC). Policies will also vary on whether personal property is covered when it's damaged in a war zone, NAIC says.

Renters may be better off sticking to big insurers. Several surveys show that the majority of renters still skip insurance coverage. Experts say that's a big mistake, considering how inexpensive most renters' policies can be. Accordingly, for most renters, price and convenience are the name of the game. Larger insurers tend to offer more sophisticated online quote tools that help renters get a quick snapshot of what they'll have to pay. They may also offer convenient bonuses such as mobile apps, and they don't rely on an agent-driven sales model -- probably best for transient renters who would prefer to do business directly with company representatives online or over the phone.

ConsumerSearch has analyzed expert and customer reviews to evaluate the claims and policy experiences of homeowners insurance companies across the U.S. The result is our picks for the best homeowners insurance on the market.

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