Whether you’re planning to buy a home, recently purchased a home, or just want to review your current policy, having an understanding of how homeowners insurance policies work can save money and headaches. Buying homeowners insurance isn’t always easy. There are so many things to watch out for, like deductibles and premium amounts, and you want to make an informed decision in terms of price and quality. The goal of every policy is to help protect your home and its contents, but what exactly are you protecting? That’s where it gets tricky. If your home is destroyed, do you get the cash value of your house or the cost to replace it? If a structure in your house is damaged, should you receive the cash value of the structure or the cost to repair it? These are some of the questions you may ask when obtaining homeowners insurance.
Remember that in the event of a natural disaster or burglary, your homeowner’s insurance will pay for repairs to the damaged portion of your house and replace your stolen property. In this article, we’ll break down the basics of home insurance for you.
What Does a Home Insurance Policy Cover?
Damage to The Exterior/interior of Your Home
Let’s say a tornado rips through your neighborhood and causes thousands of dollars worth of damage to your home. Your policy will cover the cost of repairs. Or, if a fire breaks out in your home and happens to destroy all your clothes, you’ll get a payout for the losses. So, if anything happens to the interior or exterior of your home, your insurer will reimburse you so your house and possessions can be repaired or even completely rebuilt. You can attach riders to your policy for added coverage for personal property, such as jewelry and works of art, so you’re protected wherever your things are when a covered disaster strikes.
Liability Coverage
You can never know when someone might accidentally slip and fall at your place or get hit by a car in your driveway. That’s why you need liability coverage, which can help protect you from costly lawsuits that won’t just cost you cash but could also damage your credit rating. Although policies are written with different limits, experts recommended having at least $300,000 of coverage.
Home or Hotel Rental While Your Property Is Being Repaired Due to A Covered Loss
You may never need it, but your policy should have a specific endorsement for additional living expenses. This coverage can help you if you’re forced out of your home for a certain period of time due to damages the property sustained as a result of a covered loss. Make sure that the daily limits are high enough so the expense won’t strain your budget.
