When you own a home, your mortgage company will require that you have homeowners insurance. This protects the lender’s investment from loss or damage as well as protects you and your belongings. When you take out a policy, you will see that there are different types of home insurance available. It’s important to know what these categories are so that you know what coverage you have the event of an emergency.
Standard Homeowners Insurance
If you take out a standard homeowner’s insurance policy it will include the following types of coverage:
This is the basis for all homeowner’s insurance policies. It protects the structure of your home and includes things like floors, walls, ceilings and any attached structures like garages. It also covers theft, vandalism, fire, and hail as well as help to rebuild your home should it end up being a total loss.
It’s important to note that dwelling coverage doesn’t cover everything, no matter what the limits of your policy are. That’s why many people add on coverage like flood insurance, earthquake coverage, and water backup due to sewer issues.
There is also coverage you can add for other structures that are not attached to your home, such as gazebos and sheds. Many people opt for this coverage so that they don’t have to pay out of pocket should an accident occur.
As the name suggests, this type of coverage protects the contents in your home. If a covered incident happens, you receive money equal to the value of these items.
This type of coverage consists of bodily injury damage. If someone is a guest in your home and gets hurt, the insurance will likely cover the claim. This coverage also applies if your property is damage as a result of a covered incident.
Different Types of Home Insurance
There are different types of home insurance policies to choose from depending on the type of coverage you need.
Basic Form Home Insurance
As the name suggests, this is the simplest form of insurance and the least expensive, but it comes with the least coverage. It will typically protect against fire, theft, vandalism, damage from vehicles, and lightning. This type of coverage is typically for dwelling coverage. Many people add on different types of coverage like personal liability to get more coverage.
Broad Form Home Insurance
All of the items covered under the basic form are included as well as coverage against falling objects, the weight of ice, snow, or sleet, sudden and accidental pipe damage, freezing of heaters or air conditioning units, and damage from an electrical current.
The broad form usually covers dwelling protection, other structures, personal belongings, and liability.
This is typically the most popular type of home insurance due to its coverage and cost. This not only provides the protection offered in the broad form coverage, but also covers property, personal belongings, and gives you liability protection.
This offers the broadest protection and is typically one of the most expensive types of coverage. It will typically cover more perils than other types of policies.
There are also policies available for people who own condos and mobile homes as well as for renters. Under this policy, a renter’s has coverage for their personal belongings and personal liability. Additional living expenses are also sometimes added to the tenant’s form policy.
If you own a condo, this is the type of insurance you need to get. It not only gives you the protection of your personal belongings, but also gives personal liability, and covers the interior of your condo, including walls, floors, and ceilings.
Mobile Home Insurance
This type of insurance gives the same type of coverage as in the special form insurance but is tailored for mobile homes.
How Much Home Insurance Do I Need?
Besides choosing the type of home insurance you need, you also need to decide how much coverage you’re going to carry. Typically for dwelling coverage, you should get enough to cover the replacement cost of your home, in case you have to replace it.
For personal property coverage, you need to think about how much it would cost to replace all of your belongings should you lose everything. While it may be tedious, take inventory of everything you own and estimate the cost so that you can have a running list of your personal property.
As you take inventory and realize you have special or expensive items, you’ll want to take out a special policy for them. These can include expensive pieces of jewelry, fur coats, and things of that nature.
When it comes to liability coverage, most homeowner’s insurance policies have a minimum of $100,000. It’s often recommended to buy somewhere between $300,000 and $500,000 worth of coverage if you can afford it. Liability coverage is the type of coverage you need to cover the costs that incur if someone should get hurt while on your property. Since this can get costly, many people say liability is the most important type of coverage you can have.
If you have questions about home insurance and need more information, contact Complete Financial Group. We will explain the different types of coverage available so that you can decide what type of coverage is right for you. We can also give you a quote on the type of coverage you need and explain the factors we use to determine our rates.