Home Insurance

It is a safe bet that your home is one of the most valuable things you own. And since it also houses most of your other prized possessions, homeowners insurance is a clear necessity.

We’ll review the basics of homeowners insurance, what it covers, and how you can get a quote for a policy that is right for you.

Who Needs Homeowners Insurance?

Essentially, if you own a home, you need home insurance.

In all likelihood, your home is your most valuable asset. Without insurance, you face the risks inherent to home ownership alone, and this comes with extreme financial danger. A homeowner’s insurance policy provides financial protection and peace of mind.

Not to mention, if you are paying off a home loan, your mortgage company probably requires you to have homeowners insurance as part of your mortgage agreement.

Homeowners Insurance Coverage

Homeowners insurance coverage will vary amongst insurance companies. However, generally homeowners insurance will cover:

• Structural damage – If your home and/or freestanding structures (garage, tool sheds) are damaged, your homeowners insurance will help pay for repairs.
  • If structural damage has rendered your home uninhabitable, your homeowners policy can help cover expenses for temporary shelter.
• Personal property damage – Your homeowners insurance will help pay to replace or repair your belongings if damaged in your home after certain incidents, such as fire or lightning.
• Bodily injury liability – If a guest is hurt on your property, your homeowners policy will help with medical costs for which you may be responsible.
• Property damage liability – This will help repair or replace property belonging to someone not living in your home if it is damaged in your home.

Covered Incidents

Homeowners insurance policies will cover a broad range of incidents that may cause structural damage or personal property damage.

While incidents that are covered may be broad, and may differ among policies, the following are common types of covered incidents:

• Fire.
• Lightning.
• Hail.
• Windstorm.
• Theft.

Homeowners Insurance Policy Options

Homeowners insurance policies are highly customizable. Several options are available to you. Keep in mind that taking advantage of these options will increase your premium.

Increased Limits

Increasing your coverage limits will help increase the financial protection your homeowners insurance provides.

You should especially consider increasing your liability limits if you own assets that are susceptible to loss in liability related lawsuits.

Replacement Cost vs. Actual Cash Value

Actual Cash Value

Under a typical homeowners insurance policy, personal property is covered at actual cash value, meaning if your belongings are damaged in an incident that is covered by your policy, your insurance will help you replace these items at their current estimated cash value (with depreciation factored into that value).

Considering these items are used and depreciation takes a huge chunk out of an item’s cash value, you may not be getting very much back from your insurance company for these items.

Replacement Cost

If you wish to have more coverage for your personal property, you have the option of having it covered at replacement cost. This option:

• Pays to replace your damaged property at full replacement value, meaning if an item is damaged you will get reimbursed for the cost to replace the item new.
• Does not factor depreciation into replacement cost.

Replacement cost can significantly increase your premium but does offer more protection.

Purchasing Homeowners Insurance

Most major insurance companies offer homeowners insurance, making it readily available. You can even get online homeowners insurance quotes to help you comparison shop.

Remember to compare at least 3 different quotes to ensure you get the best policy at the best rate.

Premium Rates

The cost of home insurance premiums will vary depending on several factors. Some of these factors include:

• Limits – The higher your limits, the more expensive your premium will be.
• Deductibles – These are your out-of-pocket expenses towards a claim.
  • The higher you set your deductible, the less you’ll pay for your premium.
• Location of your house.
• Age of your house.

Discounts

Most homeowners insurance providers offer discounts to help lower your rates.

Common types of homeowners insurance discounts include:

• Multi-policy discount – Bundling your different types of insurance with one company has its benefits. Doing so is not only convenient, it can save you money.
• Hail-proof roof – Depending your state, your homeowners insurance company may offer you a discount for having a hail-proof roof.
• Home security discount.
• Fire sprinkler discount.

Your insurance company may offer other discounts that no other company offers. Work closely with your insurance agent to make sure you are taking advantage of every discount for which you qualify.