7 Things To Know About Home Insurance

Your home is your biggest investment; can you afford to rebuild it and replace your possessions if the unthinkable happens? Homeowner’s insurance protects your home and belongings in the event of a disaster like fire, a backed-up sewer, theft, and hail. Most homes in the United States are covered by some type of home insurance, which is always a condition of having a mortgage on a home. Whether you already have homeowner’s coverage or you are planning to buy your first home, it’s important to understand your coverage options to choose a policy that fits your needs and budget.

The standard home policy includes coverage for the structure, personal property, and liability. If someone is injured on your property, homeowner’s insurance can pay for the damages and legal expenses you face. Most homeowner’s liability claims are the result of dog bites and slip and falls, but coverage can protect you in other situations as well. Depending on the policy you select, your insurance can pay to repair or rebuild your home following a loss. It can also pay for additional living expenses you face when you are unable to live in your home during repairs. Personal property coverage pays the replacement cost or cash value of your belongings, including your electronics, collectibles, clothing, furniture, appliances, and more.

Here is what you should know about comparing homeowner’s insurance options.

Purchase the right insurance

There are many types of homeowner’s insurance available with a range of optional add-ons and floaters to further customize your coverage. As a homeowner, you have several primary types of policies:

• HO-1. This limited coverage policy only protects you against 10 types of disasters and it’s not available in most states.
• HO-2. This basic policy protects you against all 16 named disasters. These perils include fire/smoke; explosion; lightning; hail/windstorms; theft; vandalism; vehicle damage; aircraft damage; riots/civil commotion; volcanoes; falling objects; weight of snow, sleet, and ice; sudden and accidental bulging or cracking of pipes and household systems; accidental discharge and overflow of steam or water; and sudden and accidental damage from electrical currents.
• HO-3. This is the most popular type of homeowner’s insurance and it protects you against all perils except those that are specifically excluded in your policy.
• HOB. This policy is similar to the HO-3 policy but it offers more coverage for water damage in coastal areas.
• HO-8. This type of policy is designed for older homes. It typically reimburses you for the actual cash value which is the replacement cost minus depreciation.

After choosing the type of policy, you may want to consider add-ons and supplemental insurance. Additional policies like flood and earthquake insurance offer coverage for damage not covered by home insurance. Other optional coverage options include water backup, business property in the home, scheduled personal property for high-value items, and expanded yard and garden coverage.