If you own your own home, you must know what homeowners’ insurance is and why you need it. You must know how to get the level of coverage you require for a price you can afford.
Different types of homeowners’ insurance policies exist. Many include compensation for fire, smoke, hail and lightning. Others do not cover specific causes for an insurance claim, such as vandalism, theft and falling trees.
Items like those are often optional extras. In addition, most standard insurance policies for homeowners do not include coverage for earthquakes, floods and nuclear damage.
Not only must you select the right insurance policy for your own circumstances, you must know how to assess the value of your property and be aware of how the value affects insurance premiums.
Find out more about basic homeowners’ insurance by reading the following insightful sections. You are then in a good position to choose the right insurance for your home.
Home Insurance: Need-to-Know Information
Insurance for your home is vital for both homeowners and renters. If you get a mortgage, your lender asks you to purchase a certain level of insurance coverage. If you do not do so, the lender gets insurance for you and adds the premium to the monthly amount you pay for the mortgage.
In this case, the premium is likely to be far higher than with a policy you obtain yourself. In addition, the policy may not include the coverage you want. It is therefore always best for homeowners to select and purchase their own insurance policies.
Tenants purchase renters’ insurance to protect their personal belongings and assets. Landlords are requiring tenants to purchase insurance more and more these days. In fact, it is often a condition of the lease.
The first thing you to know about insurance policies for your home is the perils included in your policy. A “peril” is an insurance term. It refers to the reason or risk of damage or loss, such as theft, wind damage or fire damage.
Make sure you know which perils are included in your policy and seek to add additional coverage for specific perils if they are not covered and you want them to be. For example, if you live in an area that is subject to many hurricanes, it is advisable to obtain a policy that covers you against hurricane damage.
Different insurance companies offer policies at different prices. It is therefore best to shop around before determining which insurer you wish to go with. Make sure you get answers to any questions you may have before signing on the dotted line.
You must know details such as which perils are included in your policy, how your premium is affected by your credit history and how long the insurer has been licensed.
Learn About Homeowner’s Insurance Coverage
Some general items are covered in most homeowner insurance policies. Coverage usually includes:
- Personal possessions.
- Personal liability.
- Medical payments.
- The dwelling, which refers to both your property and any attached structures such as heating systems and electrical wiring.
- Other structures on your property, such as guest houses, detached garages and tool sheds.
Your policy has limitations for the amount it pays for each of the above items. The amount of compensation is usually a percentage of the total cost of the insurance policy you choose. If you ever make a claim, there is a deductible.
This is a percentage of the cost of your claim or a simple dollar amount. The details of this are stipulated in your particular policy. If you choose to have a lower deductible, your monthly premiums shall be significantly higher. It is worth getting a low deductible in the long term.
What is Not Covered by Homeowner’s Insurance
It is important to know what is not included in your homeowners’ insurance policy just as much as it is vital to know what is included. Incidents like earthquakes, sinkholes and floods are not usually included.
You must add these specific categories to your policy to be eligible for compensation. Other perils are optional for most homeowners’ policies. Each one requires you to pay a higher premium.
- Falling trees and objects.
- Theft and vandalism.
- Sewage backup.
- Damage from snow, ice or the weight of sleet.
- The rupturing, freezing or sudden accidental overflow of a fire sprinkler system, plumbing system, air conditioning unit, heating system or household appliance.
If you run a business from your property, your business items may not be covered by your policy. This applies to items like laptops and printers. Many insurers blacklist specific breeds of pets.
Be aware of this if you own a breed like a wolf hybrid. Pool-related and trampoline incidents are usually exempt from homeowners’ insurance policies as well. This is due to statistics that show a high number of injuries and deaths occur when using pools and trampolines in the U.S.
Understanding the Value of Your Home and How It Affects Your Premium
You must know how to accurately value your home to determine the level of insurance coverage you require. Different factors contribute to valuing a property. These include:
- The square footage of your home.
- The materials your property is constructed from.
- The exterior features of your home, such as decks, patios, siding and windows.
- Whether or not your home has updated cabinets, fixtures or appliances.
- Whether or not your home has special flooring, such as hardwood floors.
- The value of your belongings.
Different insurance companies may place different values on your home. It is therefore important to get quotes from various insurers. If you do not agree with the price quoted by the insurer you wish to go with, hire a professional appraiser to conduct an inspection of your property.
The value of your home affects how much your monthly premium will be. Other factors that influence the price of your premium include:
- The deductible you select.
- Your credit history.
- The age and condition of your property.
- The distance from your property to fire protective services or water sources.
- The history of claims for your property and other properties in your local community.
Once you have selected and purchased your homeowners’ insurance policy, make sure you periodically review it. Do this after your property undergoes any renovation work and after further expansions of personal assets. Once you have reviewed your policy, get additional coverage if it does not include everything you now need it to.