Homeowner insurance coverage is a policy that protects your home from damage caused by natural and man-made disasters. The policy also covers liability expenses if someone is injured in your home or property and sues you for damages.
What is covered?
Home insurance policies usually cover both the structure and the personal property of the homeowner, but certain homeowners may require additional coverage for specific perils. Some homeowners may choose to purchase separate policies if they live in an earthquake or flood-prone area.
Coverage for HO-1: Residential Structures
This type of insurance covers the house and any other structures that are on the property such as the garage, shed, or fence. It typically pays to replace the home itself and its contents, up to a certain limit, depending on the insurer and the policy. The policy also covers other perils such as vandalism, theft, fire, smoke and wind.
HO-2 Coverage: Other Contents and Personal Liability
This type of insurance is more comprehensive that HO-1. It covers a wider variety of items, including jewelry, fine art, and electronics, which may be damaged or lost as a result of an accident covered by a standard homeowners' policy. Some policies offer coverage for your personal liability. This can include things like dog bites and slip and fall accidents.
The Replacement Cost Dwelling Policy
This option is recommended by most homeowners because it pays for the rebuilding of your home, including its contents, to a specified percentage of actual cash values (ACVs) of damaged items. This option is more expensive than cash value policies, but it can restore your home back to its original condition.
Choosing the Right Deductible
The higher the deductible, then the lower your premiums. This can be particularly beneficial if you have a lot of valuable or expensive possessions in your home that are not easily replaced and would be subject to extensive depreciation in the event of a claim.
Choosing the Right Coverage Levels
Most homeowners policies include both replacement cost and actual cash value coverage. For an extra charge, you can upgrade to the other two options. The majority of homeowners choose replacement cost coverage as they can get reimbursed for the entire amount, less depreciation.
Choosing a Good Insurance Company
Even though every company boasts of excellent customer care, many consumers find themselves disappointed by the insurers they choose. To determine if a company is right for you, ask about its retention rate and satisfaction rates.
Does Home Insurance Cover Damage to Other People's Property?
Some homeowners policies offer additional coverage to cover damage to the property of others. This could help with temporary living or lodging expenses while a home is being repaired or renovated. This can be a big benefit for families who lose their homes in disasters, such as fires or hurricanes.