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Homeowners Insurance: The Basics

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Homeowner’s insurance can protect your home from the damage that occurs to your property, the house itself, and the items inside it.

If you own a home, you must be covered by a homeowner’s insurance policy. Let’s face it. If you are like most of us, you cannot afford to rebuild or renovate your house.

What types of coverage are offered by a basic homeowner’s insurance policy?

  • Fire
  • Hail
  • Lighting
  • Theft
  • Vandalism
  • Windstorms

 

What types of coverage are standard?

Dwelling coverage protects the structure, the built-in appliances, and the carpet of your home from damage. If any of the hazards listed above damages your home, the repairs will be covered.

Other structures coverage protects structures on your property that is not attached to your home or primary dwelling. Examples of other structures include shed or a garage.

Personal property coverage protects what’s inside your home, like your clothing or computer.

Liability coverage comes in handy if anyone on your property is ever personally injured. It can cover include medical bills, loss of income, pain, and suffering. If there is a legal dispute, liability coverage can also cover your legal costs.

Loss of use coverage will pay for your expenses if you need to temporarily move out of your house due to a covered loss. In 2017, I had a tree fall through a large window in my living room. Thank goodness we had a loss of use coverage. I moved my family into a hotel for two weeks while the repairs were completed at my house.

Other events like floods and earthquakes are usually not covered by standard policies.

 

Am I Required to Have Homeowner’s Insurance?

Unlike car insurance, you are not required by law to have a homeowner’s insurance policy. However, if you used a mortgage or home equity loan, they will require that the home be insured. What determines the amount of homeowners coverage I can get?

  • Credit history
  • Insurance ScoreGaps in reporting
  • Number of homeowner claims
  • Frequency of homeowner claims
  • Qualities of your new home

Older homes are more expensive to insure. There is also consideration given to the type of material used in construction (brick vs. stone) and the type of roof (asphalt vs. clay shingles).

If your home has the latest alarm systems and smoke detectors, you may pay a lower premium. Other things that might reduce your premium include latch locksfire extinguishers, and sprinklers. Proximity to a police or fire department also contributes to your premiums.

Perhaps the most significant impact on your homeowner’s insurance costs is where you liveAre you located close to the water? Do you live in Florida, where there are frequent hurricanes? How about in California where there have been earthquakes or fires? If the answer to any of these questions is ‘yes,’ you will likely need extra coverage.