Essential Things You Should Know about Homeowners Insurance Policy
Life is unpredictable – one day you enjoy the sunshine right from your garden, and the next day you find it ruined by reckless motorcycle driver. Luckily, that person didn’t hurt anybody, but the material damage needs to be covered somehow.
People avoid thinking about potential accidents which could occur, but you never know the intentions of the mother nature or random passerby – and that's why you need to think in advance and provide resources which would save your budget in case of damage. So, if you don’t have homeowners insurance yet, this article will show you why you should purchase it, what it covers and what happens if you don’t have one.
What is Homeowners Insurance?
Homeowners insurance is a type of coverage that provides you with financial protection in case of theft, vandalism, disaster or some natural catastrophes which affect your home. Unlike car insurance, which is obligatory for all the drivers and car owners in the U.S., homeowners coverage is optional. However, it’s highly recommended to purchase it since it can be a huge money (and home!) saver. What is the difference between hazard insurance and homeowners insurance? This is one of the most asked questions regarding insurances. So, let’s reveal the secret! Hazard insurance is a part of homeowners insurance policy, and it refers to the coverage of the structure of the house caused by "hazards" like fire, hail, damage, theft or vandalism. Also, Hazard insurance can’t be sold separately from the homeowners policy. What does homeowners insurance cost? The price depends on your city, state, insurance company and other factors, but the average price would be about $35 a month for every $100,000 of property value. The homeowners insurance policy usually includes five types of coverages – dwelling coverage, other structures coverage, personal property coverage, loss of use and personal liability coverage. Now, let’s see what each of these plans include.Dwelling Coverage (Coverage A)
Dwelling coverage is a part of the standard homeowners insurance policy, and it kicks in when you need to rebuild or repair the physical damage that affected your property. What does it cover? • Damage caused by wind, hail, lightning or fire – you can't influence the natural disasters, right. That's why dwelling coverage kicks in if some of these accidents damage your property – the policy should cover the full cost of repairment, even in case of a complete loss. • Vandalism – you wake up and see that your window is broken with a stone – unfortunately, those things happen often, and besides damaging physical stuff, they bring a dose of discomfort to your life. All in all, dwelling coverage will compensate for the costs of repairment. • Repairment of damaged construction attached to your house – if your porch, garage or any other structure that is attached to your home is affected by vandalism or mentioned natural disasters, dwelling coverage will pay for the costs of rebuilding.
Other Structures Coverage (Coverage B)
One day you see that a tree fell right on your gazebo you’ve just built and decorated in the way you wanted – the damage is enormous, and you’ve already invested a lot of money in the renovation of your favorite outdoor place. How to recompense that now? Unlike Dwelling insurance which covers damages on your house or structures attached to it, Other structures coverage makes sure the parts separated from your house are insured as well. What does it cover? • Half-coverage for replacement or repair – this coverage mostly doesn't provide the amount of money for the complete repairment of the damaged structure – the funds will determine the exact number you'll need to pay out of your pocket. • Shed, garage or any storage room – if you're using any room for storing your home's garden equipment and tools, it would be covered in case of a disaster like a tree falls, fires or winds. • Addition of extra “other structures” coverages to your policy – if you have some luxurious other structures and the coverage doesn’t help a lot, you can consult your insurance agent and find another policy which would include complete replacement or repair of the damaged object. Why do I have to pay for this insurance policy plan if I have no other structures? – That's a very reasonable question. However, even if you don't have structures like sheds or pools, you're not able to remove this part from your policy – maybe there are some other options, and the best would be to consult your insurance agency.RELATED READING: • 10 Tricks for Lowering Car Insurance • 7 Factors that Impact Auto Insurance Price
Personal Property Coverage (Coverage C)
Theft and burglary have always been among the most stressful things that could happen to people. Imagine that someone breaks into your house and takes your TV or new gaming laptop which costs you a fortune – how are you going to compensate for the material loss? Personal property coverage includes financial help when it comes to theft or damage of your personal belongings, like furniture, electronics, sports equipment or clothing – it can cover your losses while you’re at home or while traveling around the world. What does it cover? • Personal property replacement – when purchasing a homeowners insurance policy, you have two options – the actual cash coverage or optional replacement coverage. If you opt for the second one, your stolen or damaged object can be replaced for the other at today’s prices. • Your visitor’s belongings – your insurance policy would cover the loss in case your visitor’s stuff was stolen under your property. • Half-coverage for the valuable stuff – the policy would cover half of the entire costs for things like money, jewelry, fur, semi-precious stones, watches, goldware or silverware. You can also insure the jewelry with a separate policy, making sure that total damage cost would be reimbursed. It's essential to keep the inventory of your belongings up-to-date so that you can find the most appropriate insurance policy and calculate its price. For instance, you can take photos of all the valuable stuff you have at home, and if their total value is about $17k, make sure your policy’s limit is $20k.
Loss of Use (Coverage D)
Nature can be a powerful enemy, and it can even ruin your house in a blink of an eye. If the house is not safe to stay in it during renovation, you’ll need to go somewhere else – and nobody will give you a place for free. What to do then? Homeowners policy includes a Loss of use plan which becomes active when it comes do described situation and it's a huge lifesaver when you think that everything is falling apart. What does it cover? • Immediate assistance – you might need to find new clothes and other necessities immediately after you’ve left the house – in that case, your claims representative can give you an advance against the total amount of your claim. • Additional Living Expenses – Loss of use will cover any additional living expenses which are mostly more expensive than usual. Those expenses include hotel or rental home costs, food and utility and extra car mileage. • Normal Living Expenses – you'll need to fill the form based on which the insurance company will have an insight into your expenses which include housing, utilities, services, transportation, and food. Depending on this information, you'll receive the amount of money which will cover your everyday costs. All these coverages are applicable depending on how long you will be unable to go back to your home – talk to your claims representative, and he/she will help you find a place to live temporarily.Personal Liability Coverage (Coverage E)
You invited your neighbors to come and visit you – you are enjoying lovely day, and suddenly the neighbors' son accidentally falls down the stairs and hurts his arm. The neighbors are mad at you, and they claim that your stairs are not safe for children, and that's why they want to sue you. What to do? Personal liability coverage kicks in when you need to pay for a defense if you are sued, and it can also pay for other persons’ injuries you’re responsible for. What does it cover? • Coverage for lawsuits – as mentioned, personal liability insurance will cover the expenses due to lawsuits aimed at you. • Coverage of the damages caused by you or your family member – if, for example, your child throws a ball through your neighbor's window breaking an enormously expensive and valuable object, your insurance policy will cover the loss. The same happens if you do the same thing. • Medical expenses coverage – if someone gets injured on your property (indoors and outdoors), the policy will cover the expenses of medical treatment, no matter if you’re legally responsible for that or not. There are a lot of questions regarding Dog bite liability which can be a part of homeowners insurance. A lot of people own dogs as pets in the U.S., and more than 4 million people get bitten by them every year which is a problem that should be solved. Many insurance companies refuse to insure homeowners who own certain dog breeds such as Rottweilers or pit bulls since those breeds are considered dangerous and prone to biting people. However, if you are a dog owner, consult your insurance agent and find the best solution for your pet insurance – even some agencies will cover your pet if you accept to take it to the classes of modifying its behavior.What Happens if You Don’t Have Homeowners Insurance?
As mentioned before, having a homeowners policy is not obligatory. However, if your property is not covered, you’ll need to pay the expenses of repairing out of your pocket which is the least cost-effective option. So, consider finding the insurance company which would be most convenient for your budget and avoid risks – you never know what the day may bring!