Homeowners Insurance: A key insurance decision for your properties

Homeowners insurance protects your home and its contents against disasters such as fire, wind, hail, flood, and lightning. Even if you live in an apartment or condo, you need homeowners insurance.

These properties are generally not insured against loss from conventional disaster risks; only catastrophic events like earthquakes or volcanic eruptions are typically covered by a condominium association’s liability policy or mortgage loan.

If you own a home, even an apartment or condo, you need homeowners insurance to protect it from perils such as fire, windstorm, theft, vandalism, and other hazards.

This article explains what is covered by homeowner’s insurance and what isn’t. It also provides tips on finding the right policy at the right price for your circumstances.

What is a typical homeowners policy for?

A standard homeowners policy covers losses from 10 perils, such as fire, windstorm, hail, lightning, vandalism, theft, earthquake, flood, and breakage of water pipes caused by freezing.

The first six are called “named perils” because the policy lists them by name. The last four are called “general perils” because the policy lists them as “all other perils except those listed in Section II.” Section II lists named perils that are not covered.

The standard homeowners policy has two important limitations. First, the policy covers only losses to the dwelling itself, not the things inside it. Second, the policy does not cover damage resulting from the insured’s negligence.

For example, if your child leaves a hot curling iron on the bed, leaving it there until it catches fire and burns the house down, the insurance company will not pay for the loss.

What is not covered by a standard homeowner’s policy?

Not every risk is covered by a standard homeowner’s policy. It doesn’t make sense to carry coverage for perils that are extremely unlikely to happen.

The following perils are not covered by a standard homeowner’s policy:

– Flood

– Earthquake

Volcanic eruption

property used for commercial purposes

– Hurricane

storm surge

– Hail

Theft of property

Damage caused by an intoxicated person or contractor

Damage caused by a contractor working for you

Damage caused by a houseguest

Damage caused by a tenant living in the house

Tips for Finding the Right Homeowners Insurance

If you’re shopping for homeowners insurance, be sure to review the policy to make sure the coverage meets your needs. Here are some tips to help you choose the right homeowners insurance policy.

Shop around. Compare policies and prices from several insurers to get the best fit for your needs and budget.

Insurers use different methods to determine premiums, so your insurance costs could vary if you switch companies.

Ask about any discounts offered, such as for having fire protection, alarms, or a security system. Make sure the policy is backed by a financially strong company.

Read: Mistakes to Avoid When Buying Term Insurance and How to Fix Them

Check the policy for accuracy to make sure the details match your situation.

If you later acquire a swimming pool, especially one that requires maintenance, be sure to buy additional liability insurance to cover potential accidents

If you remodel or build an addition to your home, provide the insurance company with copies of all the building and zoning permits.

If you make significant improvements to the home, buy additional insurance called builder’s risk insurance.

Read: The 3 Biggest Mistakes People Make When Buying Auto Insurance

Theft Coverage

Most homeowner policies provide limited coverage for theft losses. For example, a standard homeowners policy usually covers up to $1,000 for the loss of jewellery and other personal property if you can prove the items were stolen. It may also cover the cost of changing the locks, repairing broken windows and doors, and removing graffiti. Ask your insurer if these types of losses are covered.

However, a standard homeowners policy does not cover the loss of the house itself due to theft. If you are away from the house and someone breaks in and steals the furnace, water heater, other appliances, or wiring that provides electricity to the house, those losses are generally not covered by a standard homeowners policy.

Similar to this, a typical homeowners policy does not cover harm from rodents or insects.

Windstorm and hail coverage

Most homeowner policies provide limited coverage for windstorm and hail losses. Windstorm and hail coverage can be added to a homeowner’s policy as an endorsement to increase coverage. If you live in an area prone to hurricanes, consider purchasing a separate hurricane policy.

READ: I lost both parents; Enterprise Insurance refused to pay insurance claims.

Fire Coverage

Most homeowners’ policies provide basic fire coverage up to a specified amount. If you own very expensive items such as jewellery, furs, or collectibles, you should consider buying additional fire coverage on a separate policy.

If your house catches fire, fire coverage pays for the cost of repairs and the expense of renting a place to live while your house is being rebuilt.

It also covers the loss of any possessions that cannot be saved. However, it does not cover the expense of rebuilding a burned-out house.

Homeowners insurance is a must if you own a home. This article has explained what is covered by a standard homeowner’s policy and what isn’t. It has also provided tips on finding the right policy at the right price for your circumstances. Do well to find out from a trusted insurance company more about buying home insurance.

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Source: Wisdom Hammond