Your homeowners insurance policy is a sturdy umbrella that protects you against losses caused by natural and man-made occurrences.
Hurricane Harvey alone left in its wake an estimated $190 billion in damages. That’s millions of Americans who are facing the costly challenge of rebuilding their homes. In times like this, the question of viable insurance policies to cover the repair and rehabilitation of homes comes in full view.
Whether you own your home outright or finance it with a mortgage, getting a homeowners insurance is a topmost policy. It insures your home and its contents and ensures you’ve got help to start anew after a disaster.
What do you know about homeowners insurance, what are its benefits, how do you get one? Let’s find out below. Let’s help you find a lender too.
Benefits of Getting a Homeowners Insurance
Homeowners insurance is an investment to protect one of life’s major investments, your home.
We all know how damages to one’s home, as demonstrated by the spate of recent hurricanes, can create a financial loss for affected homeowners. This can be mitigated by maintaining an appropriate and adequate level of insurance coverage for the home.
For your home. The damages caused by storms or fire to your home can be expansive and expensive. Your insurance money can help you out with the costs of repairing, rebuilding and fortifying it against hazards and disasters.
For your family. Should someone get hurt in your home or your pet bit someone, liability is part of the policy. This means you’ll have money to fight the lawsuit and pay the judgment.
For your peace of mind. Nobody knows what the future holds for you and your home. The most you can do is to prepare for such eventualities. You’ll be able to sleep knowing that if something bad happens to your home, you’ve got it covered.
Basics of Homeowners Insurance
This financial protection offers four types of coverage on:
- The structure of the home. When your home and its detached structures including garage or gazebo were damaged by winds or storm, your insurer will pay out claims arising from such repair bills.
- The personal belongings. If your furniture and/or personal items were stolen or damaged by fire, they are covered by a homeowners insurance. Your policy can extend to fur, jewelry and expensive items but they are insured by dollar limits.
- Liability protection. When you, your family member, or even your pet causes bodily harm to someone in the property, your policy can cover the costs of defending the lawsuit and the court awards. Liability limit generally starts at $100,000.
- Additional living expenses. In the aftermath of a disaster and your home is uninhabitable, your food and expenses incurred while you take up temporary living accommodation are included in your homeowners policy.
Types of Covered Losses
The standard homeowners insurance covers fire, storms, hail, winds, snow, lightning and other specified weather disturbances. It also pays claims from damages caused by non-weather elements such as theft, vandalism, riots, and vehicles. Sudden events or accidents in the home like water leaks and tears in the heating/cooling systems are also covered.
Insurance policies do have limitations when it comes to the types of coverage. For instance, it does not offer coverage against losses caused by intentional acts. The policy does not extend to business pursuits, e.g. a home-based business. Moreover, aircraft, motor vehicles and watercraft are out of its coverage scope.
To be clear, homeowners insurance typically does not cover flood damage that should affect two or more homes per the Insurance Institute. You need a separate flood insurance pursuant to the National Flood Insurance Program. Standard homeowners insurance does not provide coverage for earthquakes, too.
As a homeowner, it’s up to you to decide and negotiate on the coverage and limits of your insurance on whether (i) you’ll require a higher liability protection, (ii) you intend to insure your expensive paintings and plants, or (iii) you buy a separate flood insurance, among other things.
Buying a Homeowners Insurance Policy
Just like your car or anything important to you that’s insurable, an adequate level of protection is key in protecting your home.
How to choose the right level of coverage for your home? Here are three important things to keep in mind when you buying your own homeowners insurance package.
- Insure your home based on 100% of its replacement value. This equals the costs required to replace your home in case of damage. It’s different from the home’s market value, which is the amount you paid to buy the home. Over time, your home might have undergone upgrades or changes that affect its market value. Factor in the costs of construction services in your area. That’s why it’s best to consult with appraisers and contractors to determine your replacement cost.
- Invest in smoke alarms, fire extinguishers, and home security systems. They protect the home and earn you discounts from insurers.
- Inquire about homeowners insurance policies. This means shopping for the best rates among various insurers soyou get the best value for your money. You can compare insurance quotes online.
Best Homeowners Insurance Rates
How do you get the best rates for your home insurance? Or better yet, how to make your premiums manageable and affordable?
Good credit counts. Just like with your mortgage rate, your credit standing goes a long way in getting a cost-effective policy.
Raise your deductible. This is the money you pay out of pocket before the insurance comes in. A higher deductible means a lower premium but be sure you are comfortable in shelling out a certain amount,
Prepare your home. Specifically, a home that is disaster-resilient and theft-deterrent is less risky to insure. This is reflected in a low premium.
Loyalty is rewarded. Some insurers offer discounts to homeowners who have multiple insurance policies with them, e.g. car and homeowners insurance. Bundling policies saves money because these multi-policy discounts are applied across the policies.
In this life of uncertainty, you can only ensure that your home is protected. Take time to shop and compare homeowners insurance policies.