What You Need to Know: Homeowners Insurance

A key part of getting a loan financed is to make sure you have homeowners insurance. After that, it is important to understand your policy and keep the correct coverage fully. Homeowners or home insurance is a must. It will help you maintain your home as well as your budget. Here is some general information to help you comprehend what you need and why.

The Basics

A residence’s exterior and interior, loss or theft, and personal liability if someone is harmed on your property are covered with homeowners insurance. The levels include actual cash value, replacement cost, and extended replacement cost/value. The neighborhood, condition of the home, and neighborhood will impact the policy rate.

Natural Disasters

If there is a fire, hurricane, or lightning damage, for instance, your home will be covered. Vandalism is also included. Floods, earthquakes, or issues from poor upkeep of the house will not be covered. If there is a freestanding garage, shed, or other structure on the property, please get additional coverage. Your clothing, appliances, and furniture will be covered when it is an insured disaster. Review the information on disasters that are covered carefully. You can consider itemizing your luxury items such as jewelry, purchasing a rider for coverage, or even a separate policy. Choose what you want to cover and what you can afford, but please consider everything in and around your home prior to an incident or anything beyond your control.

Liability Protection

To be protected from lawsuits from others, you will need liability coverage. This is also for your pets in case of an attack or biting. If someone is injured from slipping, something falling on them, or any other accident, that would be included. If someone were to sue because they are badly hurt, you would not have to worry about paying; you would be covered.

Levels of Coverage

Actual Cash Value
This covers the house, and the value of the belongings after the depreciation is deducted. This will be based on the current value, not the price paid.

Replacement Cost
The actual value of possessions and the home without the deduction of the appreciation is what the replacement cost will cover.

Extended Replacement Cost/Value
This will pay for any costs to repair or rebuild your home, even if it surpasses your policy limit.

Each year you want to check with your insurance agency and review your coverage. Changes to the home that add value can also increase the replacement cost.