Tuesday, July 23, 2024
Home Insurance

Home Insurance Explained: What You Need to Know to Protect Your Property

Protect Your Home and Finances: Understanding Home Insurance Coverage | Find out what home insurance covers and how to get affordable coverage for your property
Protect Your Home and Finances: Understanding Home Insurance Coverage | Find out what home insurance covers and how to get affordable coverage for your property

A home is one of the most important assets most US residents strive to own. According to Forbes, Americans pay an average of $378,800 to own an existing house, and $496,800 for a new home.

That’s a big-ticket purchase! So, the natural urge to do your best to protect your property from unpredictable perils is wise and justifiable. That’s where homeowners insurance comes in.

In this article, we tell you what home insurance is and what it covers so that you know what to expect when buying a homeowners insurance policy.

What Is Homeowners Insurance?

Home insurance is a type of property insurance that protects homeowners from financial losses and damages that may arise in their primary residence or house.

Common perils covered by home insurance include in-residence injuries, exterior/interior damage, theft, or loss of personal belongings.

What Does Homeowners Insurance Cover?

Home insurance offers various types of coverage to fully protect your home against losses or damages that may arise from unforeseen events like fire, vandalism, lightning, and some natural disasters.

Dwelling coverage

This covers your home structure, including the roof, walls, built-in appliances, and more. It also covers other structures on your property, like a garage or a shed. 

Your home insurance will cover the cost of repairing or replacing the structure of your home and other detached structures on your property.

Personal Property

This protects your personal belongings and valuable items in and outside of your home, like clothing, electronics, furniture, and more against theft, loss, or damage.

Liability Coverage

This covers the medical and legal expenses if someone is injured in your home or if you accidentally damage someone else’s property.

Additional Living Expenses (ALE)

This covers extra living expenses if your home is rendered uninhabitable due to a covered event, forcing you to temporarily live in a different place. It pays for accommodation, meals, and other expenses.

Homeowners Insurance Covered Events And Exclusions

Standard home insurance policies cover disasters like fire, vandalism, lightning, theft or loss, and injuries. Most basic homeowners policies may also extend coverage for certain natural disasters like hurricanes and tornadoes.

However, almost all home insurance policies exclude acts of war or acts of God like earthquakes and floods. So if you live in areas prone to these types of natural disasters, you’ll need to get special coverage to protect your home from these events.

Homeowners Insurance Liability Limit

The liability limit is the amount that your insurer puts towards replacing or repairing your home if damaged by a covered event. This amount may vary among insurance companies, but the standard is usually $100,000.

However, you can opt for higher limits if you wish. A good rule of thumb is to buy enough coverage that can bring your home back to livable condition if an unfortunate incident occurs.

Homeowners Insurance Vs. Mortgage Insurance

Mortgage insurance is required by a mortgage provider for homebuyers applying for a mortgage with a downpayment of less than 20% of the cost of the home.

Should you default on payments, the mortgage company uses your mortgage insurance to compensate for lost payments.

So, home insurance protects the homeowner, while mortgage insurance protects the mortgage lender for taking on extra risk from a homebuyer.

Get Homeowners Insurance Quotes

You can compare home insurance quotes online via insurance comparison websites, but that can be a hassle. A better way would be to engage the services of an independent insurance agent

Qualified agents work with a network of insurance companies, and are more likely to know the best home insurance companies in town.

Plus, they can quickly and easily compare rates on your behalf and tap into special discounts in their network to help you get affordable home insurance coverage.

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