What is Homeowners Insurance?
A homeowners insurance policy will cover or provide protection for your home in the event of a fire, storm, theft, vandalism, or other damage. If something were to happen to your home that requires repairs or reconstruction, a home insurance policy will cover some or all of the costs depending on the coverage you select. Home repairs, personal belonging repair or replacement, personal liability costs, temporary living arrangement expenses, and even some medical bills. Homeowners insurance covers structures on your property such as sheds, garages, driveways and fences. Insurance policies also cover personal property such as appliances, computers, bicycles and jewelry.
Policies may include loss of use or additional living expenses in the event you would need to temporarily move out of the home for repairs or construction. Liability coverage provides protection in the event someone gets injured on your property as there may be medical expenses or legal action taken against you. Your insurance policy may cover some of the medical expenses and legal costs up to a limit.
How much coverage do you need?
Before choosing a homeowner’s insurance policy, you will need to determine how much coverage you need. Estimate how much it would cost to rebuild your home by measuring the square footage and multiplying it by cost per square foot. Your insurance agent may have recommendations and assist with this calculation to set a value on your home. This will allow you to know how much coverage need. Once you have set a value on your home coverage, you’ll need to determine your personal property coverage amount which is typically between 10-50% of the home value. You may also want to consider the area where you live to assess the risk of flooding, earthquakes and fire. If the risk is high, you may want to consider a policy that offers coverage for disasters such as these.
Know what is not covered
Homeowner policies generally do not cover intentional damage or neglect of the property owner, wear and tear, wars or government action, electrical power outages, infestations, mold, mildew, earthquake or flood damage among other things. Ask you agent about separate policies for coverage if you are at high risk in these areas.
Homeowners insurance costs
Insurance policies can differ in terms of what is covered, premiums and rates, and the time involved in filing and fulfilling claims. Your annual insurance cost or premium will depend on the level of coverage you choose. It’s a good idea to compare insurance providers and the policies they offer to find the best insurance option for your needs. Homeowners insurance costs will vary from location, size of the home, age and condition of the home. The average cost for home insurance, nationally, is around $2,500. It’s best to work with an agent to obtain quotes on homeowner policies.
Deductibles and discounts
Higher deductibles generally equate to lower premiums, however it is important to make sure you have the money you need to pay a deductible should you need it. A deductible is an amount you agree to pay before the insurance will provide coverage on a claim.
Discounts may reduce the cost of the premium. Discounts are often provided for homeowners that have carbon monoxide and fire alarms, sprinklers, and security systems. Recently constructed newer homes are often eligible for discounts on the premium. Bundling your insurance products, longevity with the insurance company and low claim rates may be a way to saving money and lower your insurance cost.