Homeowners insurance can be a complicated topic, so it’s important to have an understanding of the basics. It’s also wise to know what you need and how much coverage is right for you before purchasing a policy.
Homeowners insurance protects your investment in the event of damage caused by theft, fire, or natural disasters. It also covers liability that might arise from injuries on your property. The following article will answer the question “what does homeowners insurance cover?” and how it can protect your assets.
Homeowners insurance offers a variety of policies to keep your home and personal property covered. To protect the investment in your home, it’s important to make sure you also carry insurance for the property inside, such as furniture and carpets.
The type of homeowners policy you purchase largely depends on factors like building construction and your zip code. This typically determines the assessment amount. The cost of your premiums is also based on the deductible, which is the amount you have to pay before the insurance kicks into effect.
There are three types of homeowners insurance coverage to choose from. These are:
1. Actual monetary value: The actual cash value of your home includes the cost of the house plus the value of your personal belongings after depreciation is deducted.
2. Replacement cost: With replacement cost protection, your home and belongings will be insured up to their current value or what it would take to replace them on the market, whichever is higher.
3. Extended replacement cost: This policy guarantees the replacement value will cover the expense of replacing your home in case of a total loss. In addition, your insurance company will cover the cost of rebuilding an additional 20% to 25% of your home’s worth. This is helpful if there are areas of the house that have been under-insured or left out of previous policies.
Many homeowners want to know how they can save on their monthly premiums, and there are some ways to do so, but it depends on the individual and their situation. Here are some suggestions that may help you save:
- Get a higher deductible if possible: Also, be aware that having an extremely high deductible is not recommended because if you do have a claim and your insurance doesn’t cover it, then you will be stuck paying all of it.
- Don’t cut costs, but do shop around: Check for price quotes and ensure that you get the best deal. Oftentimes, homeowners that are trying to save on their insurance end up with lower quality policies or worse insurance.
- Buy both your home and auto insurance policies from the same company: Some insurance companies offer discounts to those that purchase their auto and home policies together, so make sure to ask your agent about this.
- Look into group insurance: If you are a teacher, police officer, or work for the government in some other way, then your employer may offer group insurance. Ask about this option because it can save you a lot of money.
- Inquire about discounts on home security systems: Having a home security system can sometimes be enough to get you a discount on your insurance.
- Make your home more disaster-proof: If you can improve your home in some way so that it is less likely to be damaged, then your insurance premiums may go down.
- Stay with the same insurance company: The more years you have been with your insurance company, the less likely they will raise your premiums.
The best options for homeowners insurance are usually determined by the needs of the individual. A new homeowner may want to opt for more liability coverage, while an elder may not need to worry too much about this.
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Use this article as a starting point for your research and find what type of insurance will work best with your needs.