The Basics of Homeowners Insurance
Homeowners insurance, or homeowners policy, helps cover the cost of repairing or replacing damage to the insured person’s residence and personal property. It also helps cover liability costs if someone is injured while on the property. Mortgage lenders typically require home buyers to purchase and maintain a policy, and it’s an important investment for anyone who owns a house. There are many factors that affect the cost of a homeowners policy, including the coverage limits and deductibles, and the likelihood of certain types of damage. By understanding the basics of a policy and shopping around, you can find the best homeowners insurance for your needs.
A homeowner’s policy is usually written in one of two different forms: Broad Form (HO-2) or Special Form (HO-3). The latter is more comprehensive and covers most perils unless specifically excluded, such as earthquake or flood. Some insurers offer an even more comprehensive policy by adding an endorsement that removes specific exclusions. Most insurers require a deductible, which is the amount you are required to pay for a claim before the insurance company starts to pay.
Most standard home insurance policies provide enough coverage to rebuild or repair the dwelling to its original value. They also usually include protection for garages, sheds and other structures on the property, as well as outdoor items like patio furniture and barbecues. Some policies have additional options, such as swimming pool coverage or pet liability.
The type of home you have and its location can affect your homeowners insurance rate. For example, houses made of wood or brick are generally more expensive to repair than those built of vinyl, and they’re at a higher risk for damage from fire or wind. Insurance companies may also take into account the distance from your home to fire stations and hydrants, whether or not you have certain safety features in place, such as smoke detectors, burglar alarms or pool fences, and whether you live near a hazardous site, such as an airport.
Homeowners policies usually include personal liability coverage, which pays for medical bills and court costs if you or members of your household are legally responsible for injury to others while on the premises. This coverage also usually includes a limited amount of coverage for losses related to home improvement projects, such as plumbing repairs or replacements, landscaping and debris removal. It’s a good idea to have your home’s appraisal updated regularly so that you know what kind of value to insure it for, since the cost of replacing your home can change as building methods and materials evolve. Many insurance companies calculate the replacement cost of your home using formulas that are unique to them, so it’s a good idea to shop around and make sure you get the most coverage for your money. You can find a great deal of information online about homeowners insurance, and by talking to local agents. The most important thing is to carefully read your homeowners policy and renewal declarations, so you are aware of the coverage you’re purchasing.