Your home is often your largest investment. Make sure it’s protected by learning about homeowner’s insurance.
It’s important to have the proper homeowner’s insurance in place for your largest single investment – your home. Many people have homeowner’s insurance simply because they had to purchase it when they financed their home. But the coverage is so much more than just a mandatory purchase to fulfill the mortgage requirements.
Your homeowner’s coverage can help protect your house, of course – but did you know it also offers protection for your personal belongings, outbuildings like sheds, fences, landscaping, and even personal liability?
Understanding your insurance coverage is important so you can make the right choice in coverage. We’ll help you break down what homeowner’s coverage includes and how to purchase it.
Considering Your Home Insurance Needs
You’ll have to make some decisions when it comes time to purchase your homeowner’s insurance. Your coverage is designed to protect you, your family, and visitors to your home.
There are several factors to keep in mind when determining your level of coverage:
- Your home’s replacement value
- The replacement value of your personal items in the home
- Your home’s age
- The way your home was built
- Safety features and amenities of your home
Replacement Cost or Actual Cash Value
Consider also whether you need to have a policy with replacement cost, or a policy based on actual cash value. Replacement cost means the amount it would cost to replace your home and belongings with the same or similar home in today’s dollar cost. Actual cash value, on the other hand, factors depreciation into the reimbursement, which means you would not get the cost to replace your property in today’s dollars, rather the original cost less depreciation. Replacement cost basis is often more popular for homeowner’s policies.
What Does Homeowner’s Insurance Cover?
Your homeowner’s insurance policy covers many different things as part of the standard policy. There are conditions and exclusions with any insurance policy, so be sure to read your policy and ask your agent if you have any questions about your coverage.
1. Your home’s structure – Your home is a large investment and if it were damaged in a fire, storm, or other coverer peril your homeowner’s insurance would help you rebuild or fix the damages to the property.
4. Medical costs
Ask your agent for more specifics about what is covered under your homeowner’s policy.
Common Exclusions on Homeowner’s Policies
Homeowner’s policies cover many things, but there are a few common exclusions to be aware of so you can plan ahead if you need this coverage.
Vacant Home Insurance – If you have a standard homeowner’s policy, generally, these policies will not cover your vacant home for major claims such as fire, wind, liability, and more. If you have moved out of your primary home, and plan to leave it vacant for a while, you will need a vacant home insurance policy to protect this home.
Wear and Tear – General home maintenance costs – and issues caused by a lack of general maintenance – are not generally covered by your homeowner’s insurance. There are other home warranty-type policies you may be able to purchase, but your homeowner’s policy doesn’t cover damages caused by wear and tear.
Airbnb Insurance Coverage – Turning your home, or part of it, into an Airbnb can be a great way to generate income for your family. However, most homeowner’s policies may not automatically cover home sharing. In fact, some insurance carriers might consider this as business activity, and you could be dropped from the company. However, if you are planning on home sharing, you will need Airbnb coverage.
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