One of the biggest investments a person can ever make in this world is getting a land/house to his/her name.
And I'm certain that no one would want to spend huge amounts of money in getting a house, and then watch the house get damaged without being able to do anything.
Or in the case of people that can afford repairs, no one would like to be spending money on the same thing that has once been done.
In order to avoid double spending, it is a wise decision for one to get a homeowners insurance policy.
And that's why I wrote this article for you to be able to get enough knowledge on the insurance policy, therefore making you to know exactly what you want and which plan suits you.
On this article, I'll be talking about;
• What is homeowners insurance?
• Key things you should know about homeowners insurance
• Types of homeowners insurance coverage
• What a homeowner's insurance policy covers
• What a homeowners insurance policy doesn't cover
Let's slide right into the topic of discussion.
WHAT IS HOMEOWNERS INSURANCE?
Homeowners insurance, which is also known as home insurance, is a type of insurance policy that provides protection for your home and possessions against theft or damage.
The insurance policy, unlike some other insurance policies, isn't considered a form of luxury. It is recommended to and needed by typically all homeowners.
In fact, most, if not all mortgage companies demand that borrowers get the homeowners insurance coverage for either the fair or full value of a property, this usually being the purchase price.
Without proof of the insurance policy, the mortgage company will not finance a residential real estate transaction or make a loan.
It is also not necessary for one to have a home before the person can get insurance, as some landlords make it a requirement for their tenants to get and maintain a renter's insurance policy.
It is a good idea to get insurance though, whether it is required or not.
KEY THINGS YOU SHOULD KNOW ABOUT HOMEOWNERS INSURANCE
Here are a few things that someone getting a homeowners insurance policy needs to know.
• The policy basically covers the cost of repair of the destruction of both the interior and exterior parts of a residence, costs of buying lost and/or stolen items, and the costs of personal liability in case the insured unintentionally harms others with/on the property.
• The rate of the policy is much determined by the insurer's risk that the insured will file a claim. The insurers calculate this risk with reports based on past claim history that is associated with the home, the neighborhood in which the home in question is situated, and the condition of the home.
• There are three basic types of the homeowners insurance coverage in existence. They are; actual cash value, extended replacement cost/value, and replacement cost.
• To achieve best results when shopping for a homeowners insurance policy, get quotes from five different companies or more, but at least five, and in case you already work with an insurer, check with them, cause oftentimes, current clients get better deals.
TYPES OF HOMEOWNERS INSURANCE COVERAGE
I mentioned the three types of homeowners insurance coverage above, and they are;
• Actual Cash Value
• Extended Replacement Cost/Value
And
• Replacement Cost.
Why don't we get the concept of all three?
Actual Cash Value
This type of homeowners insurance coverage provides coverage for the cost of the house and the value of the insured's belongings after the deduction of depreciation. That is, the current worth of the items, not the amount that the insured bought them.
Extended Replacement Cost/Value
This type of homeowners insurance coverage is typically the most comprehensive.
It is an inflation-buffer policy, and it covers payments for whatever the costs of the rebuild or repair of the insured's home - even if it exceeds the policy limit.
Some insurers offer an extended replacement, which means it offers more coverage than the one the insured purchased.
But a ceiling is involved; it is 20% to 25% higher than the limit, typically.
Replacement Cost
This type of homeowners insurance coverage covers the actual cost of the insured's home and possessions without the deduction for depreciation, so the insured would be able to rebuild or repair his or her home up to the original value.
WHAT A HOMEOWNERS INSURANCE POLICY COVERS
The homeowners insurance policy covers certain costs of the insured's home, although they are infinitely customizable.
These are however, those things that a typical homeowners insurance policy covers.
√ Damage To The Interior And Exterior Parts Of Your Home
In the case of the damage of your house, because of events like hurricane, fire, lightning, and other similar natural disasters, the homeowners insurance policy makes it possible for the insured to be compensated to ensure his/her house is repaired or rebuilt completely, although disasters like flood, earthquakes, and destruction of the house due to carelessness like poor home maintenance are not generally covered.
As a homeowner who wants coverage for these conditions, you can also purchase seperate riders.
√ Personal Liability For Injuries Or Damage
The policy provides liability coverage which protects you from lawsuits filed against you by other parties.
For example, if someone comes to your house and slips, falls and gets injured, then decides to sue you, you can file a claim to your insurer, which will in turn, cover the costs of settling the case out of court.
√ House Rental Or Hotel Accomodation While Your Destroyed Home Is Being Rebuilt Or Repaired
In most cases, it is very unlikely for damages to force an insured individual out of his or her home, but if it does, the insurance policy would cover the costs of either the rent or hotel room, restaurant meals, and other miscellaneous stuff you happen to need while in wait of the rebuild of your home.
WHAT A HOMEOWNERS INSURANCE POLICY DOESN'T COVER
It might seem like there's no damage to a house that goes without a homeowners insurance cover, but there are actually some.
Disasters like earthquakes, flood, hurricane and acts of war, are not covered by a typical homeowners insurance.
But like I said earlier, it is possible to get add-on riders for the coverage of these disasters too.
