Homeowners Insurance provides you with the coverage in case of a disaster. In the event of a disaster your homeowners insurance will provide you with financial protection. A homeowners insurance policy insures the home in which you live along with the possessions you keep in it.
Home Insurance is a Package Policy
Homeowners insurance is purchased in a package policy. A package policy means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or a member of your household cause to other people. Homeowners insurance also covers damage caused by household pets.
A homeowner’s insurance policy covers most disasters, however there are some exceptions such as floods, earthquakes and poor maintenance (Also known as wear and tear). If you want coverage for floods or earthquakes, you will have to purchase separate policies. However, maintenance related problems are the homeowner’s responsibility to take care of. In fact, keeping up with the maintenance of your home will help to reduce the likelihood of a loss in the future. A good example of this is the replacement of a roof that is showing signs of wear.
Overall it is very important to have homeowners insurance coverage that suits your specific needs. You never know when a loss is going to occur and you are going to need the money to fix it. Take Hurricane Katrina for example; there were many of people that were without homes because they didn’t have flood insurance. That is why it is very important that you get the proper coverage.
Remember that standard homeowner’s policies do not cover flooding so you will have to purchase that separate through your homeowner’s insurance agent. Discuss all of the possible exposures with your agent, broker, or insurance company.
Replacement Cost
Replacement cost coverage is available for the structure of your home; This allows you to repair the home to the state that it was before the damage took place. Actual cash value coverage is replacement cost less depreciation. The older your possessions are, the less you will recover from the homeowners insurance company.
Renters Insurance
Not only is insurance coverage available for homeowners it is also available for the people who rent apartments or houses. If you rent a house and you have a renters insurance policy, you will be covered in the event of a loss. The coverage for a renter is relatively inexpensive and will cover your property, your liability, and loss of use of the home due to a covered loss.
Coverage Types
The standard homeowner’s insurance policy includes four different types of coverage. 1)The coverage for the structure of your home is offered by the homeowner’s insurance company. This means that they will repair or rebuild your home in the event of a covered loss. 2)The coverage for your personal belongings that you have in your home is also covered by the homeowner’s insurance company. This means in the event of a claim that is covered by your insurance policy, your personal belongings will be able to be replaced. Note: It is a good idea to carry replacement cost coverage for your contents. This way, your items are not depreciated if there is a loss. With replacement cost coverage, your property can be replaced with items of like kind and quality. 3)Liability protection covers you in case of a law suit against bodily injury or property damage that you are your family members caused to another party. 4)Additional living expenses if you are temporarily unable to live in your home because of an insured disaster.
There can be more to a home insurance policy and there are limitations for certain types of property. It is best to discuss these options with a representative at the time your are applying for coverage.
While purchasing a homeowners insurance the first issue of extreme concern is the amount of coverage you want. A recent survey conducted by the Insurance Information Institute revealed that two-thirds of all homes in America were underinsured by an average of 27%. Thus it is important to opt for a right amount of coverage.
If you are finding it difficult to calculate the extent of coverage you want, there are several ways to do it. For instance if you want coverage for reconstruction of your house then multiply the square foot of your home by the local building cost per square foot. To know the cost of rebuilding your house, also known as dwelling coverage, you can take the help of any local insurance or real estate agent.
For instance in Nevada an average of 1268 square foot home that was built in 1997 has a current dwelling coverage of $81000. However if the homeowners feel that they are underinsured by 27% and increased their coverage to $110,000, the monthly payment will increase by $7.50 per month.
Since most often the homeowners insurance also compensates for personal liability, you should also keep in mind how much coverage you require for certain legal expenses, medical expenditure or injury to any member of the house.
Though a standard homeowners policy comes with liability coverage of worth $100,000, insurance professionals usually advise to get of coverage of around $300,000 to $500,000 as liability coverage. To have this extra amount added to your standard homeowners policy, purchasing an endorsement is a wise idea.
You can also go for personal umbrella coverage in case the worth of your assets is more than $300,000 to $500,000. The umbrella cover is extremely useful once you are through with your homeowners or automobiles coverage. For instance if your colleague is injured at your house and revengefully sues you for $500,000, your homeowners insurance will cover for $300,000 and get exhausted but the amount left will be easily covered by the umbrella coverage.
For insuring your household things there are three ways. First is the actual cash value in which the policy pays for replacing your personal property using the method that is based on replacement cost of the thing minus the depreciation?
Second is the replacement cost strategy where you receive current amount for the thing you lost in any of the covered dangers. Though this way requires you to pay an additional premium but it can prove extremely beneficial in the long run.
The third option is the guaranteed replacement cost. This coverage means that there is no maximum payout applied to coverage of your insured personal possessions. You need to pay an extra premium but on the same hand increase your deductible to make the coverage somewhat cost-effective. Similarly the structure of our house is also to be insured in these three ways but with slight variation.
According to current facts and statistics presented by National Association of Insurance Commissioners in 2002 the average expenditure on homeowners insurance increased by 12% from $593 to $668 in 2003. Expenditure varies with the state. For example in 2003 Texas witnessed the highest average expenditure of $1328, in Oregon it was $461, Delaware $442 and Maine $462.
Both Robert Lawrence & Mansi Gupta are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Robert Lawrence has sinced written about articles on various topics from Health Insurance, Homeowners Insurance and Insurance Quotes. Robert co-founded Insurance4USA.com, an insurance quote shopping service -, in 1999. He has been a licensed insurance agent in New York Sta. Robert Lawrence's top article generates over 4400 views. to your Favourites.
Mansi Gupta has sinced written about articles on various topics from Tax, Business and Finance and Vacation. Mansi gupta recommends that you visit for more information on Homeowne. Mansi Gupta's top article generates over 90500 views. to your Favourites.