Your Home Is Important, Make Sure It’s Protected
Your home is the foremost valuable asset and investment, so like all your other insurance policies that you have acquired over the years, it only makes sense to protect your investment with a homeowner’s insurance. Should any unfortunate event happen with your most valuable asset, your insurance coverage will financially secure and protect your property and all the belongings in your house. Your home insurance is very important in the duration until you are paying the mortgage and the lenders would specifically always advise you to get your home secured.
The policy will cover the cost of any repair and maintenance if your house is damaged to an extent that is not livable and one cannot reside the moment any accident has occurred. Legal expenses and personal liabilities such as in a case when an unintentional accident has led to third-party damage, whereby they file a lawsuit. In difficult situations like a lawsuit, you are also covered through a Homeowners’ insurance policy.
There are two main types of Homeowners insurance; HO2 and HO3.
Homeowners insurance (HO2)
The HO2 is a less comprehensive policy and this is often described as named-peril policy. Which means that there is a list of named perils that your policy will cover. Following are some main named perils;
- Fire and lightning
- Accident caused by vehicles
- Damages done by aircraft
- Frozen house pipeline systems
- Volcanic eruptions
- Overflow and discharge of water
- Electric current accidents
The HO3 policy is described as an open peril policy, which means that they cover all perils except for those otherwise notated by the insurance company themselves. At the same time, your personal property is still covered underneath the named peril basis. For the broadest amount of homeowner protection, there is a policy called an HO5 that covers everything the HO2 and HO3 cover, plus your home and the personal property for all occurrences except for those specifically excluded by your insurance company.
You still may need specific insurance for things like a natural disaster such as insurance could include flooding, earthquake, landslides, mold, infestations, wear and tear nuclear hazards, and government action. In many cases, you can buy flood insurance and earthquake insurance as a separate policy and in hurricane/tornado-prone areas you may want to consider wind-storm insurance. Talk to your insurance agent if you have specific weather-related concerns about an insurance policy that ensures that you have the right amount of coverage.
Basics of Homeowners insurance policy
Now it is important to point out that basically there are three major steps to getting your homeowners insurance. Firstly, you need to carefully plan out and consider what coverage you would require from the policy. Keeping in mind all the named peril categories. Once you have decided upon the coverage you need for your home and personal property you then set out payments for insurance through options of monthly, semi-annually, quarterly, and annually. Lastly, whenever any unforeseen event occurs that damages your real or personal property, you can then claim it against the outlined perils you mentioned earlier.
Homeowners’ insurance policies are made up of several different distinct categories. Some of these categories come as a standard part of the policy itself, while some can be added on with standard coverage policy. There are six these broad categories.
This covers the damage to your homes such as damage to the roof or floor, and it also covers damages to the attached structures; for instance, a parking garage is an attached structure to your house. Usually in this case the cost of repair and maintenance would equal the restoration cost of the whole home.
Other structures protection
This covers standalone structures on your property such as a fence, toolshed, mailboxes, and pool.
Additional living expense coverage
Also known as loss of use. This type of policy helps you pay for any temporary housing expenses and basic living expenses in case your house becomes totally unlivable due to an unfortunate event such as a bad accident caused by named perils. If you are forced to vacate your home underneath the cover loss of your homeowner’s insurance policy.
This refers to all your personal belongings that you own at home such as your furniture, electronic devices/appliances, wardrobe/, kitchen products, home décor, jewelry. Your Homeowners insurance reimburses in case these belongings are either damaged or are subject to vandalism/theft. A really quick way to identify what personal property is from real property is that if it’s attached to the property affixed to the property it’s considered real property. If it is separate or loose like a TV, home sound system, sofa, etc, it will be considered as personal property.
This will cover the cost of a lawsuit filed against you, in case the person got injured or their personal property is damaged in your house. For instance, a person slips and falls down on a wet floor at your house and injures themselves, and then comes back to sue you. This insurance policy will protect if you were deemed responsible for the occurrence of that person slipping
Medical payment insurance
This will cover the costs of medical expenses if you were deemed liable for the cause of the harm to the person and if you or your family caused an injury to another person away from the home i.e. nonresident.
How much does your homeowner’s insurance cost?
For a starter paying for your Homeowners insurance is not expensive. In fact, in a 2019 report by the National Association of Insurance Commission the average insurance policy cost around $1,211 annually i.e. $100 monthly. However, the cost of your premiums will be determined through a set of factors. These include,
- Firstly, your living history of the home, its locations, the material used in manufacturing.
- Secondly, the total price/cost of your insurance policy as this will determine the term based premiums.
- Claim history: This will recount how many you have already claimed the damage protection, the history of your home’s structural damage.
- Credit History and ratings: This reflects how likely you are to return the credit. The greater the credit score will be, the more likely an insurance company will provide you with an insurance policy.