Oct 4, 2018
Insurance should be a priority for every homeowner. You are not forced by law to have it. But a home is your largest financial investment and insurance protects it.
So what is home insurance and what does it cover?
Homeowners insurance is a type of insurance that gives you the financial protection in case your home suffers any kind of damage. An insurance policy covers you from having to pay a massive amount at once when bad luck comes knocking at your door.
Home insurance policies cover personal property and personal belongings, but it is more than what’s inside your home. It even includes your additional living expenses in case of loss or damage and personal liability.
Here are five things you should know about home insurance coverage:
Every insurance company offers different kinds of coverage. The most common ones are:
Comprehensive: an inclusive home insurance policy that covers the property and its contents.
Named Perils: also called "basic" insurance, this policy only covers the perils stated explicitly in the contract. This can be areas that are at risk of suffering damage.
Broad: a mid-size coverage option for those that want to protect the most critical parts of their home.
No Frills: insurance coverage for homes that already have some sort of malfunction or don't meet home insurance standards.
Personal Liability: protects you in case someone injures themselves on your property, or you damage someone else's property.
The most popular choice among homeowners (and the most recommended) is the comprehensive home insurance. Why? Because it protects you from all risk. All the structures in the property, all your belongings and even additions to your home will be covered.
Homeowners policy categorizes insurance in separate sections from A to G. Here are the categories and what they include:
A) Dwelling building: the foundation of the building.
B) Other buildings: any structure that is not part of the main building.
C) Contents: your personal belongings.
D) Additional Living Expenses: the cost of your living arrangements in case of loss or damage.
E) Personal liability: covers you in case a third party gets harmed on your property.
F) Voluntary Medical Payments: covers the cost of medical services in case a third party gets injured in your property.
G) Voluntary Property Damage: covers any damage you cause to another property.
Every homeowners insurance policy has its exclusions. It is important to know what is included in your policy and what is not.
It is evident that any home insurance doesn't cover property taxes, condo fees or your mortgage in case you default, but there are other exclusions that you might not think about. Depending on the type of coverage you choose, there will be uninsurable risks. These are not included in your policy because they can be prevented. All you need is proper home maintenance. Damages caused by frost, snow, indoor plumbing, pollution, vermin, flooding and more are normally not covered. Plus, any losses related to criminal acts and wars are not counted in your policy.
If you need more coverage, there are additional options you can add to your policy. Your home might be at risk of damage that is not usually covered, or you might want to fill in the gaps that your policy exclusions caused. For example, you can ask for earthquake coverage, flooding coverage, sewer back-ups, jewelry and valuables, etc.
Insurers offer many options of coverage depending on the state of your home. If you don't insure your home, you might end up without one. Protect it and get a home insurance quote in four simple steps!
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