homeowners insurance 101

Homeowners insurance 101

Your home is most likely the most important investment you’ll make in your lifetime, if you’re like most people. Making sure it is protected from an unexpected event is crucial to your financial well being. Let’s take a look at some of the things you should be aware of when purchasing homeowners insurance.

Most policies cover four areas

1. The homes structure

2. Personal belongings

3. Liability coverage

4. Additional living expenses

Structure of Your Home

If your home is damaged or destroyed by one of the disasters named in your policy you should have enough insurance to rebuild. Other Structures that are typically covered include: garages, storage sheds, and fixtures attached to the land including fences, driveways, sidewalks, patios, and retaining walls.

Personal Belongings

Personal property protection can be based on actual cash value or replacement cost and covers the contents of your home and other personal items owned by you or family members. Taking pictures or video of you valuables is a way to provide proof of ownership in the event of a claim. Many policies include off-premise coverage, which means your possessions are covered any where in the world.

Liability

Liability coverage protects against you against law suits in the event someone gets hurt on your property. It pays for your defense in court and any money you are required to pay, up to your policy limit. If someone is injured in your home, it also includes no fault medical coverage.

Additional Expenses

Loss of Use typically covers living expenses over and above your normal living expenses if you are forced out of your home during repairs of damages caused by one of the covered disasters, a standard policy will pay for your hotel stay, restaurant bills, etc.

Two types of coverage are actual cash value and replacement cost coverage.

An actual cash value policy pays to rebuild your home, minus depreciation. A replacement cost policy pays to replace your home and possessions without a deduction. The highest level of protection is guaranteed replacement cost coverage.. Choosing the right coverage is extremely important. I suggest a guaranteed replacement cost policy. With this type of coverage the total cost to replace your home will be paid, even if it is higher than your policy limit.

These are the primary areas you need to consider when shopping for homeowners insurance. Do some research online and compare quotes from different insurer’s. Narrow your quotes down to two or three, and then contact the agents with any questions you have. Spending time comparing quotes is worthwhile and can save you a significant amount of money.