Homeowners Insurance

Home is where the heart is. For most Americans, a home is also the investment of a lifetime, and building one from scratch often takes years. Protecting this valuable asset is crucial since unforeseen events such as natural catastrophes and other perils that are beyond the homeowner's control could jeopardize everything that he or she spent years laboring for. While safeguarding against all unforeseeable dangers is impossible, financial risks may be eliminated by taking out homeowner's insurance. In the event that the policyholder's home and personal effects are damaged or destroyed, homeowners insurance coverage provides priceless peace of mind by enabling the insured to recoup monetary losses and start all over again. Policyholders should ensure that they obtain adequate coverage to protect both the real estate and their personal belongings.
Standard home insurance policies protect the insured against disasters such as:

Breaking glass Collapsing buildings Electrical damage Explosions Falling objects Fire Frozen plumbing fixtures Hail Lightning

Riots Sleet or snow Smoke Storms Theft Vandalism Vehicle or aircraft crashes Water damage Wind

Consumers should compare the insurance coverage offered by the different policies under consideration. Each policy contains exclusions and named perils. Specific situations or hazards that a homeowner insurance does not cover is known as an exclusion. Common exclusions include the following:

• Criminal or intentional acts
• Damage cause by mudslide, landslide, or snow slide
• Damage from power failure
• Damage resulting from corrosion, rust, or wear and tear
• Damage resulting from the freezing of indoor plumbing
• Damage to aircraft or motor vehicles
• Damage to the exterior of the home due to melting or freezing
• Earthquakes
• Injuries to animals
• Nuclear accident
• Vermin or dry rot
• War
• Water damage caused by underground water

The essential types of home owners insurance coverage are as follows:

1. Coverage for the home's structure

It is important that policyholders purchase enough home insurance to rebuild their home. If the insured's real property was damaged by a named peril, this category of coverage provides for repairs or reconstruction. The home, attached structures, as well as fixtures such as air-conditioning systems, heating systems, wiring, plumbing, and built-in appliances are covered.

2. Coverage for other structures

The majority of homeowner insurance policies cover damage or loss to detached structures such as sidewalks, driveways, fences, storage sheds, and garages. Typically, these are covered for nearly 10% of the coverage amount that a policyholder has on his or her home.

3. Coverage for personal possessions

This type of coverage insures against loss or damage to personal belongings in the home and other structures such as shrubs, plants, trees, exercise equipment, clothing, and furniture.

4. Additional living expenses or "loss of use"

Under this portion of a standard policy, policyholders whose home was damaged by an insurable peril are covered above and beyond ordinary living expenses. While their home is undergoing repair or in the process of being rebuilt, "loss of use" covers living expenses such as restaurant meals and hotel bills. Deemed one of the most critical features of a home insurance policy, loss of use generally amounts to 20% of the insurance on the policyholder's home. Individuals who rent a part of their residence are reimbursed for their loss of income.

5. Liability protection

This offers personal liability protection against lawsuits for property damage or bodily harm that is suffered by third parties such as guests on the insured's property and that is caused by the homeowner or members of his or her family. It also covers damage caused by pets. Experts strongly recommend consumers to purchase protection with a minimum value ranging from $300,000 to $500,000.

Home insurance companies offer a garden variety of policies including the following:

• Replacement cost policy, which pays for repairing or replacing a damaged structure with materials that are of like quality and type
• Extended or guaranteed replacement policy, which covers the cost of rebuilding the insured's home as it was prior to the disaster (i.e. tornado, hurricane, fire)
• Modified replacement cost policy, which covers repairs to older homes which are undertaken by utilizing standard modern-day construction methods and building materials
• Coverage for the insured's personal property in the form of actual cash value or replacement cost
• Personal articles floaters or endorsements which cover expensive items such as furs, silverware, art, antiques, coin collections, and jewelry

 

Homeowners insurance rates vary according to geography - being higher in areas prone to disasters such as tornadoes or hurricanes and in high crime areas. Consumers' credit rating is often taken into consideration in calculating the home insurance premium. To calculate local rates in your area, it’s best to receive several insurance quotes to compare coverage rates and get an better deal. Prospective policyholders may lower their home insurance rates or qualify for a discount in a number of ways:

• Higher deductible
• Purchase of life insurance, health insurance or car insurance from the same home insurer (referred to as a multi-policy discount)
• Condition and age of the home
• Fire-resistant construction materials
• Paid off mortgage
• Non-combustible or impact-resistant roof
• Installment of home security devices (smoke alarm, fire, and burglar systems), which lower rates by 5-10%
• Fire extinguishers
• Senior citizens discount
• Good claims history (i.e. over the course of three years)