When most people think of homeowners insurance, they think of it as something that will help them rebuild their home and replace their belongings in the event of a disaster. But there’s more to it. It’s important that you learn what your policy does and does not cover. This way, you’ll be better prepared if something bad happens to your home.
Homeowners Insurance Basics
Your home insurance policy protects against damages occurring to your home itself, along with your possessions inside. In some cases, it will also protect your property as well as you. This package policy combines two basic types of coverage.
The first coverage type is to cover your property if destroyed or damaged by theft, wind, or fire. So, if there’s a burglary or a fire then your insurance will help cover any destruction and losses. The second coverage type is to protect you if someone experiences an injury on your property. Therefore, if someone is injured or, in some cases, if their property is damaged on your property then your insurance may cover this.
All that considering, insurance policies vary depending on your exact coverage and needs. It’s important to understand what types of coverage you have and how it protects you.
Standard Home Insurance Policies
While policies can vary, you can almost always count on what’s covered in a standard policy. Typically, most policies cover damage resulting from:
- Fire
- Hail
- Lightning
- Theft
- Vandalism
- Windstorms
Other natural disasters, such as earthquakes and floods are not usually covered by a standard policy. These coverages are usually associated with an additional fee for homes in an area at risk for these events. When you’re considering purchasing a home you’ll want to make sure you’re figuring the cost of these added expenses into what you can afford in a monthly payment.
Types of Coverage for Home Insurance
There are different coverage types when it comes to homeowner’s insurance. Each coverage type lists specific examples of things included under that coverage. You’ll want to speak with your insurance agent to make sure you have adequate coverage in each of these areas.
Dwelling coverage includes the structure of your home as well as any built-in appliances and carpet (excluding area rugs). The term “dwelling” refers to your home’s entire structure as well as any connected structures. Connected structures include attached buildings such as garages. If your home sustains damage by a covered event then your dwelling coverage helps pay for repairs or any rebuilding that takes place. If you have other structures on your property that aren’t attached to your home such as a guest house, shed, or detached garage then coverage on these structures may cost extra.
Personal property coverage protects your personal belongings including jewelry, electronics, and furniture if they sustain damage or are destroyed by an event covered in your policy.
Liability coverage can help cover the costs associated with bodily injuries for others on your property. It can also help cover any expenses that come up due to negligence. This typically includes medical bills, pain and suffering, loss of income, and potentially more. In the event of a dispute, liability coverage may also cover your legal defense expenses.
Loss of use coverage helps in the event that you’re unable to live in your home temporarily due to a covered loss. It will help cover any additional housing or living expenses incurred. For example, if your home needs repairs or rebuilt after a fire then this coverage would help pay for the cost of a hotel or temporary housing.
Is Home Insurance Required?
To answer this question we must first understand the context. Unlike auto insurance, state law doesn’t require homeowner’s insurance. However, your mortgage lender may require you to have at least a basic home insurance policy. This ensures protection of your home and belongings should you experience a covered event. It also protects the bank from taking a loss if your home were destroyed.
While there aren’t technically any legal ramifications for not having home insurance, we strongly recommend you get coverage. Homeowner’s insurance protects the things that matter most to you and your family. Natural disasters and other events can occur in the blink of an eye. Losing your home and its contents is truly devastating. Getting the right coverage can help give you peace of mind that you can rebuild after a disaster.
Complete Financial Group can help you find the right home insurance plan for your situation. If you’re buying a new home, unclear on your current policy, or if you simply want a comparison quote, our experts are standing by.
