Understanding Homeowners Insurance

Written By: victor shallow on October 27, 2009 No Comment

If you’re like most people your home is most likely the most important investment you’ll make in your lifetime. Making sure it is protected from an unexpected event is crucial to your financial well being. Let’s take a look at some of the things you should be aware of when purchasing homeowners insurance.

Most policies cover four areas

The structure of the home

Personal property

Liability coverage

Additional living expenses

Your homes structure

If one of the disasters named in your policy damages or destroys your home you should have enough insurance to rebuild. Other Structures that are typically covered include: garages, storage sheds, and fixtures attached to the land includingdriveways, fences, patios, sidewalks, and retaining walls.

Personal property

Personal property protection covers the contents of your home and other personal items owned by you or family members and can be based on actual cash value or replacement cost . Taking pictures or video of you valuables is a way to provide proof of ownership in the event of a claim. Many policies include off-premise coverage, which means your possessions are covered any where in the world.

Liability

In the event someone gets hurt on your property liability coverage protects you against law suits. It pays for your defense in court and any money you are required to pay, up to your policy limit. If someone is injured in your home, it also includes no fault medical coverage.

Additional Expenses

Loss of Use typically covers living expenses over and above your normal living expenses if you are forced out of your home during repairs of damages caused by one of the covered disasters, a standard policy will pay for your hotel stay, restaurant bills, etc.

Two types of coverage are actual cash value and replacement cost coverage.

An important decision you’ll need to make is what type of replacement coverage you want. An actual cash value policy pays to rebuild your home, minus depreciation. A replacement cost policy pays to replace your home and possessions without a deduction. The highest level of protection is guaranteed replacement cost coverage. With this type of coverage the total cost to replace your home will be paid, even if it is higher than your policy limit. I suggest a guaranteed replacement cost policy.

These are the primary areas you need to consider when shopping for homeowners insurance. Do some research online and compare quotes from different insurer’s. Narrow your quotes down to two or three, and then contact the agents with any questions you have. Spending time comparing quotes is worthwhile and can save you a significant amount of money.

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