Do you own a home?
Then you need homeowners insurance.
Homeowners insurance typically covers damage caused by natural disasters or weather events like fires, lightning strikes, wind storms, and hail storms.
Homeowners insurance also often covers theft, vandalism, and related damages.
Depending on where your home is located, you may want to add additional earthquake or flood insurance.
A homeowners insurance policy is meant to protect the home and its contents from disasters, both financial and otherwise.
It insures both the structure itself and the contents inside.
It also covers liability for accidents that occur on your property.
What is Homeowners Insurance?
Homeowners insurance is property insurance that covers your private residence.
Often abbreviated in the real estate industry and mortgage industry as HOI, homeowners insurance or home insurance bundles together various types of personal insurance coverage, including losses occurring to one’s home like damage from a weather event or natural disaster, damage to a home’s contents, loss of use and the additional living expenses associated with that, and loss of a home’s contents (in the event of theft or burglary).
This type of personal insurance also includes liability coverage for accidents that may happen in your home or within policy territory, e.g. your backyard or the land that your residence is located upon.
Personal Liability is also included for members of the household, e.g. while playing basketball at the park you injure another player accidentally.
Homeowners insurance is considered a multi-line type of insurance policy, which means that it includes property insurance as well as liability coverage under one premium.
Homeowners insurance covers many types of damage to your home, particularly damage that occurs during natural disasters like fires, hail storms, and tornados.
It can also cover theft and vandalism; if your home is burglarized, homeowners insurance can help cover the cost of your stolen possessions.
Be aware that if you have any high end jewelry or other extremely expensive and/or rare items, you may need to insure those items separately with valuables insurance.
Why Do You Need Homeowners Insurance?
You should protect the assets that you’ve worked so hard to acquire.
This type of insurance protects your home and the contents inside from a variety of disasters and harmful events; it may also cover your liabilities in the event of an accident or other problems on your property.
And if there is a mortgage on your property the lender will want to secure their loan.
How Do You Choose the Right Type of Homeowners Insurance?
Everyone who owns a home needs to carry homeowners insurance.
What’s more, your mortgage lender or homeowners association likely require it as well if either of those circumstances apply.
But even if you don’t have a mortgage or a homeowners association to deal with, you still need to carry homeowners insurance to protect your assets.
It’s important to understand the covered perils under your homeowners insurance policy.
There is a difference between “named perils” and “all risk”.
Named perils mean that your insurance provides coverage for losses specifically listed on the policy (and if it is not listed, it is not covered).
On the other hand, all risk is broader and that term means that your insurer will provide coverage for all losses other than ones that are specifically excluded on the policy.
What Type(s) of Homeowners Insurance Do You Need?
Homeowners insurance policies generally cover damage to your house or condo that’s caused by unforeseen events such as fire, wind, hail, or water (note that flood coverage or water damage may be excluded by the individual policy).
Homeowners insurance can also cover damage to personal property like furniture, appliances, clothing, and electronics.
Often policies have limited coverage for things that may be stolen from your home as well as unique, high-value property and collectibles.
If you have expensive jewelry, electronics, or other items in your home, you may want to schedule those items to ensure there is coverage.
The overall cost of homeowners insurance is based upon what it would cost to replace the property and its contents, along with any additional endorsements or riders attached to the policy.
These include additional liability coverage if you have a pool and/or trampoline, along with extra coverage for fine jewelry, costly electronics, and similar items.
How Much Does Homeowners Insurance Cost?
The cost of homeowners insurance depends on the amount it would take to replace the residence and its contents, along with any additional riders or endorsements attached to the policy.
It will likely be adjusted according to inflation or location and the associated cost of living.
You may be able to lower the cost of your homeowners insurance by equipping your house with security systems, insurer-approved locks, fire sprinklers, and fire alarms; wind mitigation measures like hurricane shutters may be advisable depending on your location and the likelihood of a hurricane, tropical storm, or windstorm occurring.
Note that there are some standard exclusions such as floods – if you live in an area that is prone to flooding, you may want to purchase flood insurance as an addition to your basic policy.
Acts of war (including nuclear explosions) are also normally excluded, along with other standard exclusions such as earth movement.
House insurance payments are typically made annually, but it is generally possible to work out a different payment plan with your insurance company.
Keep in mind that if you experience damage or a loss, you should take steps to mitigate the loss (think covering a damaged roof with tarp or boarding up broken windows after a storm, for example).
You’ll also need to notify your insurer within a reasonable time period after a disaster or other insurable event has occurred.
After making a claim on your homeowners insurance, a claims adjuster from the insurance company will investigate your claim and you may be required to provide them with various documents such as receipts for any purchases, estimates for the cost of repairs, and similar items.
Also, be aware that you’ll likely be required to pay a deductible, which is the amount that you (the policy holder) must pay out of pocket to cover your property loss or damages before the insurance company will consider your claim.
You do not pay that amount to your insurance company, but rather the service providers or stores or merchants that supply you with the goods and services to fix your property or replace your items.
What Other Types of Insurance Are Related to Homeowners Insurance?
There are several different types of insurance that are related to homeowners insurance, including many different types of liability insurance like umbrella liability insurance.
When you’re buying homeowners insurance and any other related types of insurance, you should make sure that you have enough coverage to rebuild your home if necessary along with enough liability coverage to protect your assets.
Your home is probably one of your biggest and most valuable assets, if not the very biggest.
And it’s probably one of the largest purchases you’ll ever make.
Therefore, protecting it with the appropriate homeowners insurance coverage is not only extremely important, it’s essential.
You’ve invested in your home – so you need to protect that investment with the appropriate level of homeowners insurance.
Ready to learn more about the best homeowner insurance policy for you? Contact an ASCO Insurance specialist today.