Types of Homeowners Coverage

homeowners
homeowners

Home is the safest place to be in. Today, with the pandemic around you must ensure you protect yourself and your home too. In our guide for homeowners insurance we spoke about what homeowners insurance is, and why is it important for your house.

Whether you have begun searching for a new home or you’re waiting to close on your dream home, one important aspect of moving you can’t ignore is insuring your investment.

So, let us now look at the coverage of homeowners insurance. Here you will get to know about the coverage details and its types.

How to choose your coverage plan?

You know how different insurance companies will pitch in their offers to you. To be honest, it is very important to do your market research. Each policy is different and has specific coverage. So, you might think shopping for homeowners insurance might not be necessary-but with so much competition in the market you need it. You must choose the best deal that fits your needs.

So, before taking your policy, you must consider the following:

Decide what kind of coverage you need

The coverage you need is the first step to look into -when you plan to buy insurance. Be realistic and list the kind of damages that may occur in a house and think what will you do under such a situation. Your location also plays a key role-if the place you witnesses burglaries regularly. Also, the place you live is constantly hit by floods or other natural calamities. You must then sign up for greater coverage than in other cases.

The deductible you can afford- Homeowners

The second step is determining your affordable deductible. It is advisable to have a higher deductible to avoid the burden in the future. Many homeowners settle for the lowest deductible, experts advise against this practice. So, one way to lowering the premium of your homeowners insurance is to pay more towards the deductibles.

homeowners insurance quote
homeowners insurance quote

Choose the company you will deal with

So, now that you know the steps to find the best coverage for you. This is the time to weigh all the options available in front of you. But, you will see some companies offering specific coverage only. Therefore, you must choose someone that offers the ideal rate and has a lot of positive reviews from current customers. Also, ensure that the company you choose has a claims process that is smooth and convenient- also does not take a lot of your time.

Three-level of coverage

Actual cash value

Actual cash value is the amount equal to the replacement cost, minus the depreciation of the damaged property at the time of loss. So, it covers the cost of your house plus the value of your belongings after deducting depreciation. (i.e. how much the items are currently worth and not what you paid for them).

Replacement cost

Replacement cost policy covers the actual cash value of your home without deducting for depreciation. So, this helps you repair or rebuild your home up to the original value. But, the replacement cost may fluctuate depending upon the market value. So, insurance companies routinely use replacement costs to determine the value of an insured item.

Guaranteed (or extended) replacement cost/value

Guaranteed replacement cost means the insurer will pay you the whatever the rebuild amount is — sometimes even more than your policy limit. Some insurance companies offer an extended replacement, which means it offers more coverage than you purchased. However, it is 20% to 25% higher than the limit.

So, Experts feel guaranteed replacement value policies are best to protect your homes. Because it gives you enough insurance to rebuild your home, preferably at current prices (which probably will have risen since you purchased or built). 

More coverage types

COVERAGE TYPEWHAT DOES IT COVER?HOW MUCH ARE YOU COVERED FOR?
Dwelling coverageCovers the structure of your home and built-in appliancesCoverage limit should be equal to your home’s estimated replacement cost
Other structures coverageCovers detached structures on your propertyUsually 10% of your dwelling limit
Personal property coverageCovers your personal belongings both inside and outside the homeUsually 50% of your dwelling limit
Loss of use coveragePays for additional living expenses while your home is being repairedUsually 20% of your dwelling limit
Personal liability coveragePays for legal and medical bills if you’re held liable for injury or personal property damage to someone elseUsually between $100,000 and $500,000
Medical payments coverageIf a guest is injured in your home, it pays for their medical bills, regardless of who is at faultUsually between $1,000 and $5,000
Source -Policygenius

What is Not Covered by Homeowners Insurance?

Homeowners insurance usually covers all losses, but some events excluded from it. So, Act of God and Act of war not covered by them. Something like flooding or sewer backups, and earthquake damage or something which is a maintenance problem is also not covered.

How to File a Homeowners Insurance Claim

  • Firstly file a police report if needed
  • Inform your insurance company
  • Make urgent repairs- Repairs that are urgently needed should be photographed and receipts for the material you purchased
  • Document the claim – You should document all damaged items, stolen items or anything which will create the basis of the claim
  • Make sure you take enough photographs and video of each room

Take homeowners insurance now!

We know choosing the right coverage for you is an overwhelming task. It plays a major part to protect your most valuable asset from unforeseen circumstances. So, consider each point before you finalize your plan.

Homeowners insurance will help you save money from those sudden damages. You not only protect your house but also secure money to keep it safe.

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