Homeowners insurance is something we all need in order to protect our assets from loss and it is required by all mortgage lenders. However, it can get very complicated. Insurance can not only cover the structure of your home and your personal property, but also cover any personal legal responsibility (or liability) for injuries to others while on your property. Here are some homeowners insurance basics.
If something happens to your property and you need to file a claim, there are two primary people you?ll be in contact with. They are your insurance agent and the your insurance adjuster.
There are a different types of packages offered by homeowners insurance policies. Here are the main types of coverages.
A peril is the insurance industry’s name for what’s covered in a property policy. Each policy is different and covers different perils. You should always read your policy very carefully to understand what perils are included on your policy and what perils are not included on your policy. Perils covered by different types of polices are: fire, smoke, windstorm, hail, lightening, explosion, vehicles, civil unrest, theft, vandalism, tress or other falling objects, weight of ice, snow or sleet, freezing, rupture or sudden and accidental overflow or plumbing, heating, air-conditioning or fire-sprinkler system or household appliance. Homeowner’s policies don’t usually cover flood damage or earthquake damage. So, if you live in an area where these can occur, additional coverage will need to be purchased.
A form is a type of homeowner policy. Which perils your policy covers depends the type of policy you buy. There’s a is a difference between open and named perils coverage.?Open perils provides insurance coverage for any reason not specifically excluded and named perils provides coverage only for those perils listed. Here are the most common types of forms.
The limits of coverage is the largest total amount the insurance company will pay for covered losses. Your coverage should equal how much it will cost to replace your home. Keep in mind, the replacement cost and market value are not the same. For example, the market value includes the price of your land and also depends on the real estate market, which can fluctuate. The limits of your coverage for other structures, for personal property and loss of use, are typically expressed as percentages of your dwelling limit and are usually a set percentage.
In addition, you can choose to insure your home and it’s contents for either replacement costs or actual cash value.
The deductible is the amount you have to pay out-of-pocket for expenses before the insurance company will cover the remaining costs. The deductible applies to coverage for your home and personal property and is paid on each claim. Higher policy deductibles mean lower policy premiums.
Depending on which insurance company you choose, many factors can affect the amount of premium you pay. Different insurance companies charge different premiums for similar coverage. Also, premiums also are affected by how much insurance coverage you buy. In addition, how often you file a claim and the types of claims you file often affect your premium and whether your insurer will renew your policy.
It’s always a good idea to shop around and compare prices from different insurance companies. Before you shop around, decide what coverages and policy limits you need.? Also, be prepared and know how much it would cost to rebuild your home before shopping around.
For more information on homeowners insurance, go to the National Association of Insurance Commissioners.