Basics of Homeowners Insurance

Ah, the joys of owning your own home. Financial and personal freedom is great, but there’s a lot of responsibility that comes with it.

From the days spent ferociously deep cleaning the kitchen only to cry with someone who comes in right after and messes it up to the ever-growing list of bills that need paying – a lot is going on. One of the bills high on the list — 85% of American homeowners have it — is home insurance.

Homeowners insurance is a safety net that protects you and your hundreds of thousands of dollars investment. Keep reading to learn the basics of homeowner insurance and the key bits of information you need to know.

What Does Home Insurance Cover

Let’s get straight to the point – home insurance covers a wonderful array of items and situations, but what your homeowner insurance covers will depend on the company and policy that you chose. It’s common knowledge — as it is with any insurance policy — that the more you play, the more you’re likely to be covered

That’s not necessarily always the case, however, as you’ll notice when shopping around that some insurers will charge hundreds more than others might even though they offer the same coverage. Homeowners’ insurance coverage typically covers anything from hazard insurance to theft to broken appliances. The bullet points below will explain the areas most homeowner insurance policies cover:

• Dwelling – covering faults with the structure of your home as well as any outhouses, sheds, and carports.
• Personal property – This covers personal belongings and contents of the house like appliances and furniture.
• Liability – This will cover legal expenses should you take a contractor to court, for example. Or, it can also cover harm caused to visitors while in your home.
• Medical – Medical claims typically fall into a similar category to liability, and payouts are often made in smaller amounts to cover payouts.
• Additional Living Expenses – This payout would cover fees you have to pay living in temporary accommodation because of an issue with your home.

When you look at how many things home insurance covers, it’s worth looking into policies to see what they cover. There are some things that most home insurance providers exclude, such as flood damage and earthquake damage.

Why Do You Need It?

There’s a short and sweet answer to this. If you want to be covered for anything, or even just some of what’s bullet-pointed above, you should have a home insurance policy. The alternative is having to pay outright for any repairs, thefts, or damages that might happen to your property. In particular, homeowners insurance is great at giving you a helping hand if you’re the victim of a break-in.

Considering over a million burglaries in the US happen every year, it’s handy to have something that would act as a safety net.

Remember, policies cover all sorts, and you can always request to have only certain things covered. It’s the same with auto insurance. If you don’t want a breakdown cover or windshield repair, your premium will be cheaper.

Shopping Around

You’ll notice when shopping around that there are different types of homeowners insurance coverage, as well as the things it will cover.

Actual cash value reimburses you the cost of your home and the value of any belongings inside it after subtracting depreciation. Replacement cost covers the value of your home and your belongings without considering depreciation. Guaranteed replacement cost is the most comprehensive as it’ll cover any repair or replacement, whether it’s less or more than the value of your home.

Those are the three main types of coverage insurers provide, and within that coverage, they will detail the specifics of what they will cover. For example, if the oven breaks and it was purchased at $800, and you have a guaranteed replacement – you can be sure that you’ll get a like-for-like model. You may find it useful to try insurance comparison websites, research insurer reviews, and research the insurers themselves to see which provider is a good fit for your needs.

There’s plenty of insightful information that should help you make an informed decision.

Homeowner Insurance Forms

Homeowner insurance forms are something you’re likely to see when shopping around. The forms essentially describe the different types of cover available, so it’s worth knowing which one covers what. Below are the forms you’re most likely to see:

• HO-1 – Typically the cheapest type of insurance that covers the most basic ten risks. HO-1s don’t cover liability.
• HO-2 – Liability cover is still missing, but with an HO-2, you’ll get covered for 16 risks – including theft and fire.
• HO-3 º This is still a basic cover, but it will satisfy mortgage lenders. It covers all risks, liabilities, medical coverage, and any additional living expenses.
• HO-5 – HO-4 is designed for renters, but an HO-5 is the most comprehensive insurance package.

That basic overview of homeowners insurance should provide you with enough information to get shopping. Starting with a better understanding will help you find the best policy for you. Consider the type of coverage you want and how much you’re willing to spend and secure a policy that suits you.