Your Home: Housing: It’s Not Just About Shelter

In most cases, your home is probably one of the biggest investment you will make in your lifetime, and so you need to protect it. It could be impossible for an individual to cater to rebuilding or repairing his or her home upon facing disaster, this is why there is need to have the right homeowner’s insurance. This policy not only protects your home but also offers you comfort by providing insurance facilities.

What Is Homeowners Insurance?

A homeowners policy is a form of an insurance policy that offers the homeowner protection in the event of specific loss to his/her home or property, the property in the home, or if you are legally responsible for any incident. By making monthly, weekly or annual premium payment to an insurance company, you are covered in instances such as fires, thefts, or other damages. This coverage also includes other people’s bodily injury or property damage you may cause to them.

Key Terms You Should Know

• Claim: If you want to request for money from your insurance policy, you submit a claim to your insurance provider. They evaluate the loss and their extents before they determine whether or not you will get it reimbursed depending on your policy.
• Declarations Page: The ‘Declaration Page’ of your homeowners insurance policy that shows your premium amount, coverage limits and the address of the property as the policy indicates.
• Deductible: This is a component of the total claim that you are expected to make before the rest is catered for by the insurance. The price is inversely proportional to the amount determined as the deductible; meaning that if you agree to pay more of the accident price yourself, you will be charged lesser on your insurance premium.
• Endorsement: Amendment or rider to your insurance policy that has the effect of alter or expand coverage. For instance, identity theft protection can be added through an endorsement.
• Limit: The largest sum of money that a policy will reimburse for a specific state. These types of coverage range from one another in their limits; for example; $300 000 for the structure of your home and $150 000 for its contents.

What homeowners insurance do you need?

Homeowners insurance protects the policy holder against loss or damage to property by fire, hailstorm, tornado, flood due to burst pipes etc. If any of these events happen to your home or your belonging your insurance will be able to cater for the repair or replacement bills. As well, it provides security in instances when your assets are stolen or damaged by vandals.

But there is much more to homeowners insurance; if someone decides to sue you for an injury or loss in your dwelling, you will have to pay for their lawyers. Also when a disaster makes the house uninhabitable, the insurance policy can cater for the costs of extortion for temporary accommodation like hotels or rental houses.

Conventional Kinds of Home Insurance Coverage

Homeowners insurance policies typically include six types of coverage:

• Dwelling Coverage: This one also helps in preserving the structure of your home building and other annex structures like porches or garages. It normally pays to reconstruct your home.
• Other Structures: This includes structures which are situated on your compound and are not part of the main house for instance fences, sheds and detached garages. It is a fraction of the dwelling coverage, more specific, it is 10% of the dwelling coverage.
• Personal Property: This assists in providing compensation for the items that have been lost through harmones, fire or theft. It usually ranges between 50 percent and 70 percent of your dwelling coverage.

• Loss of Use: If your home is made uninhabitable due to a covered calamity, this coverage relieves expenses on temporary shelter. It is normally equivalent to up to 20% of your dwelling coverage.
• Personal Liability: This covers costs if through an inadvertent act of omission or commission, you cause harm to another person or their property. The limit of coverage commonly vary from $100, 000 and $500, 000.
• Medical Payments: Should a third party experience an accident in your premises, this coverage may be used to refund their medical bills even when you are not to blame. Usually the coverage limits that are provided are between 1000 and 5000 dollars.

Dwelling Coverage: Protecting Your Home

Dwelling coverage also encompasses the framework of your house including wall spaces, floor, and built in devices such as furnace. Other part of the house like porches and garages are also included. Usually the policies cover ordinary perils such as wind, hail, fire and lightning.

Example: If a tree falls on your roof in the course of a storm, you make your deductible and the insurance company will pay for the rest up to the policy limit.

Other Structures Coverage: Detached Structures

Similar to the other structures, if you own a shed, fence, or a detached garage, this coverage will help to protect them from the impacts like fire or wind. For instance, if certain snow brought down portion of your fence, this coverage would pay for damages afterwards, after meeting the deductible.

Personal Property Coverage: Your Belongings

As the name suggests, personal property coverage refers to your belongings, things like clothes, furniture and electronics regardless of where they are. However, this coverage is usually in the form of insurance against a list of defined risks such as theft, fire or act of vandalism among others.

Example: Suppose a pipe bursts and rains destroying furniture in the dining room; your dwelling coverage will fix the built-in things like cabinets and your personal property will replace the furniture.

Loss of Use Coverage: Temporary Living Expenses

If your home is damaged in a covered disaster and becomes uninhabitable, loss of use coverage will help to pay for temporary residence, meals and so on. However, if the damage is due to something that your policy does not protect you for, for instance, flood, your insurance company will not pay for these extras.

Example: If your kitchen and living room have been burnt, then your insurance will pay for a similar home where you can live as your home is being rebuilt.

Liability Coverage: Protection Against Lawsuit

This coverage pays for your legal defense in the case of a lawsuit and covers costs if you are sued for injuring a person or damaging their property. This coverage also extends to pets and therefore if your dog bites someone, then you may be sorted. However, the policy will not pay for deliberately inflicted injury or loss arising from car mishaps.

Example: If you’re sued for medical costs after a visitor falls on your icy sidewalk, your liability coverage would fund legal costs and payments, up to your policy limit.

Medical Payments Coverage: Injury Protection

Medical payment coverage is made to pay for such things as treating minor injuries of other persons irrespective of who was at fault. For example, if your dog decided that someone from your friend’s circle is his favorite chew toy, then this will go to the hospital, and medical payments coverage will pay for it.

Homeowners Insurance doesn’t cover:

As much as homeowners insurance is very vital it is very important to note that is does not cover everything. Most policies exclude damage caused by:

    Floods

    Earthquakes

    Sewer backups

    Wear and tear

    Infestations

    Nuclear hazards

Various types of risks cannot be covered by homeowner insurance policies but you may get flood or earthquake insurance.

Homeowners Insurance Endorsements

Still, you may find there are several things that your basic policy does not cover all what you would like covered, this is when you can opt for endorsements or better still, riders for more coverage. Common endorsements include:

• Scheduled Personal Property: They also cover expensive items that you own such as jewelry, art, and more.
• Water Backup Coverage: Protections for damages caused by a backup of sewer lines or sump pumps.
• Ordinance or Law Coverage: Enables your home to be built in conformity with current building standards when undergoing repairs.
• Equipment Breakdown Coverage: It entails repair with major systems and the major home appliances.
• Identity Theft Insurance: Covers for expenses incidental to identity theft.

Replacement Cost and Actual Cash Value

When it comes to homeowners insurance, you may choose between replacement cost and actual cash value coverage:

• Actual Cash Value: Cost of repairs and renewals of properties to their original value, less any depreciation. This implies that there may be inadequate insurance coverage for older items so as to give them full market value.
• Replacement Cost: Pays for actual, up-to-minute items that replace used ones, and does not allow for depreciation.
• Extended Replacement Cost: Pays extra when rebuilding costs are higher than the amounts stated under the policy.
• Guaranteed Replacement Cost: Conducts full replacement cost of your property even if the cost is more than the policy coverage amount.

Homeowners Insurance: Deductibles

Also constructed in your policy will be the deductible, this being the amount that you will be expected to pay first before the insurance takes the responsibility. The key thing with this type of insurance plan is that if you agree to pay a higher amount when making a claim, your premium will be lower.

Example: For instance, if you are to pay a $1,000 deductible, and the repairs cost $10,000, the insurer pays $9,000 while you pay $1,000.

Kinds of Homeowners Insurance Policies

Homeowners insurance comes in different forms and categories but the most popular one is known as HO-3 policies which basically provides open perils coverage for your house and contents. HO-5 policies are the best because they give the most coverage whereas HO-1 and HO-2 policies just give the least.