Home insurance explained
Congratulations! You’re on your way to becoming a full-fledged homeowner. Before you let the drawn-out home buying process pass you by and start enjoying the first moments of home ownership, be sure to stay on top of the home insurance process.
After putting so much time, effort, and money into purchasing your new home, you’ll want to make sure your home has the proper coverage it needs.
Of course, you’re probably not even sure about the type of different coverage you need.
Although there is a standard home insurance policy, each home and each owner has individual exposures that must be considered. And while insurance can seem like a thorny process, if you look at the coverage piece by piece, it’s easier to understand.
Insurers summarize six basic forms of coverage so that even a layman can understand the information.
The Six Basic Forms of Homeowners Insurance
1. Coverage for your home: This coverage protects you from damage to the actual premises in your house. If there is a covered loss – one resulting from events such as fire, storms, theft and/or vandalism – you will be reimbursed up to the repair or restoration limits. To assess your coverage needs in this regard, you and your insurance professional can estimate how much it would cost to rebuild your home. Additionally, if there is a mortgage on the home, your lender will require specific types of coverage, as well as certain limits and deductibles.
2. Your other structures: Any detached garage or similar, such as sheds or fences, will be protected with this form of cover. Coverage is usually up to 10% of your home insurance amount, but you can ask for more coverage if you think you need it.
3. Your Personal Property: This aspect of insurance protects you against damage or loss to your personal belongings. This includes furniture, sporting goods, computer systems, kitchen appliances, etc. The standard policy will cover the actual cash value, but if you feel it’s better to go with the replacement cost cover, you can opt for that. Both of these forms of coverage are subject to the limits and deductibles set forth in the policy.
4. Your Loss of Use Coverage: In the event that your home is so damaged by a covered peril that you cannot live in it while it is being repaired or reconstructed, this form of coverage pays for your temporary living expenses.
5. Personal Liability: This coverage will protect you from a lawsuit if you or other household members cause injury to another person or damage someone else’s property.
6. Medical Payments: This type of coverage will cover the medical expenses of the injured on your premises.
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