Home Insurance 101: The Basics
Your home is likely one of the largest investments you’ll ever make. Homeowners insurance provides valuable financial protection in the event your home suffers damage. Homeowners insurance offers several different protections to help keep your home and family safe, including financial protection for the structure of your home, your personal property within the home and your liability.
What is homeowners insurance?
Homeowners insurance is an insurance policy that covers eligible catastrophic losses that occur in your home. It is not a policy meant to cover everyday occurrences, but is more for events like a fire or theft where you incur a substantial financial loss.
A standard homeowners insurance policy provides four primary coverages for homeowners:
Dwelling coverage – Homeowners insurance offers financial protection if you your home needs to be rebuilt or repaired due to a eligible cause of loss.
Contents coverage – Homeowners insurance will also provide coverage for many of the items in your home, like furniture, clothing and other personal belongings if they are damaged or stolen.
It is important to be aware of exclusions related to homeowners insurance coverage for your personal property. Oftentimes, valuable items, like jewelry, furs or collectibles, may be subject to special limits and will need additional coverage through a rider or more specific insurance policy. There may also be limits placed on items that face a loss outside your home. Be sure to speak with an agent to review any exclusions of note.
Liability – Homeowners insurance offers liability protection to you and your family members (including pets!) if you are to cause bodily injury or property damage to others. This also covers injuries your guests may incur while in your home. If you have other assets in addition to your home, it is wise to choose liability limits that will protect those assets. Speaking with an agent can help ensure you have proper coverage.
Loss of use coverage – If a loss by a covered peril were to make your home uninhabitable, this coverage would cover the costs of living away from your home, including temporary lodging, meals and other costs above your normal standard of living.
An agent can help you find the right combination of coverages to protect your home.
How much do I need?
The amount of homeowners insurance you need depends on several factors: the value of your home, the amount of personal property within your home, your assets and your personal risk tolerance. While it is advised to consult a licensed insurance agent to determine how much coverage you need, consider the following:
Take an inventory – taking a formal inventory of the belongings within your home can be eye-opening. The value of your personal items may surprise you. Being realistic about what you have in your home is key to understanding how much personal property coverage you need.
Don’t forget your assets – Your home, your personal property, your business and your investments are all assets you should consider when choosing liability protection limits.
Know your coverage – Another thing to note when choosing your insurance coverages is what your policy actually covers. Many policies will offer either actual cash value, which covers the cost to replace items but with a reduction due to the depreciation of those items over time; others offer replacement cost coverage, which covers the cost to replace your items with items of like quality.
Make sure you understand which coverage you have to avoid any surprises if you need to file a claim.
Your home isn’t just an investment, it’s where you live. Homeowners insurance help provide you valuable financial protection where you need it most.
Learn more about homeowners insurance from InsuraMatch:
Why Homeowners Insurance Policies Aren’t Created Equal
The Best Reasons to Reexamine Your Homeowners Policy
10 Surprising Things That Are Excluded in Most Homeowners Policies
Shopping for the Best Homeowners Insurance Policy
Finding The Best Insurance Coverage for a Condo