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home insurance a guide for newbies

Home Insurance Guide: An Overview for Newbies

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For something so important, home insurance is often undervalued. In fact, many homeowners admit to not being fully aware of the details and specifics of their policies.

Whether you’re purchasing home insurance voluntarily or to comply with the requirements of your mortgage application, you must go through and understand the features and fine points of your home insurance coverage. Only then will you be able to maximize the protection and benefits that your policy provides.

Buying home insurance for the first time can be both intimidating and overwhelming. The range of options to choose from and the unfamiliar terms coming out of the agent’s mouth can leave any newbie in a daze.

Taking the time to educate yourself on the basics of homeowners insurance before meeting with an agent will help you navigate the complexities and come to a well-informed decision.

These fundamental facts about home insurance will help understand what you’re signing up for and why.

A Quick Introduction To Homeowners Insurance

introduction to homeowners insurance

It only takes one disaster to knock your home and everything you’ve built to the ground. And when that happens, how will you get back on your feet?

With home insurance coverage, you’ll have the resources and support you need to rebuild your home and recover from the loss. Think of it as a lifebuoy that keeps you from drowning even when giant waves come.

While the primary purpose of homeowners insurance is to protect the physical integrity of your home, its coverage goes well beyond the structures within your property. The insurance may include personal belongings and liabilities, depending on the type and level of cover you require.

A Typical Homeowners Insurance Policy Covers The Following:

  • Damage to physical structures
  • Loss or theft of covered personal belongings
  • Medical and legal liability expenses
  • Temporary living expenses

Your standard home insurance policy, however, will not cover any loss or damage caused by flooding, earthquakes, and eventual wear and tear. You may opt to purchase separate or additional insurance for these perils if you deem necessary.

Breaking Down The Different Types Of Home Insurance Coverage

There are four basic types of home insurance – property damage, additional living expenses, personal liability, and medical payment. These four types are further broken down into six different subtypes or coverages, which are as follows:

1. Property Damage Insurance :

Includes damages to the property caused by wind, hail, and fire. Floods and earthquakes are excluded from most basic homeowners insurance policies, but you can purchase them separately or as an add-on. If you live in a flood-prone area, flood insurance should come in handy.

            Coverage A – covers the main structure of the home.

            Coverage B – covers all other structures in the property.

            Coverage C – covers lost or stolen personal belongings and contents of the home.

2. Additional Living Expenses Coverage

Coverage D – covers the temporary dwelling and living expenses in case of severe home damage.

3. Personal Liability Insurance

Coverage E – covers legal liabilities and expenses for property damage lawsuits.

4. Medical Payment Insurance

Coverage F – covers the medical expenses of people who injure themselves on your property.

Determining The Right Amount Of Coverage

determining the right type of coverage
Photo by bruce mars on Pexels.com

When trying to determine the right amount and level of your home insurance coverage, there are three critical factors that you need to consider.

Protecting your personal assets

While there are limitations to every type of coverage in your insurance policy, you are allowed to adjust them as you see fit.

Do you collect precious artworks? Do have plenty of jewelry? Do you own any valuable décor? If you do, then extending your contents insurance coverage should protect your high-priced possessions from theft or loss.

To ensure that everything’s covered, make an inventory of the items with their corresponding costs. Discuss these details with your agent.

The amount required by the lender

If you’re purchasing home insurance as a requirement of your mortgage loan, then your lender may have already set a minimum coverage amount. Most of the time, mortgage lenders demand insurance coverage that is the same amount as your mortgage.

Additional requirements by the insurer

Some insurance companies may require certain clients to purchase additional coverage before allowing them to avail their homeowner’s insurance products. This usually happens when the property insured is located in an earthquake or flood-risk area. In which case, the applicant will have to carry an earthquake or flood insurance with the homeowner’s insurance coverage.

Choosing The Right Home Insurance Provider

With so many insurance companies operating all over the country, you shouldn’t have any trouble finding one to service your home insurance. Keep in mind, though, that the insurer you choose will determine your entire insurance and claims experience.

When it comes to financial services, reputation is everything. That said, a little research on your potential insurers will give you an insight into the quality of their services and their customer service model.

The key to scoring an excellent deal is shopping around. The first offer may sound good, but the second and third ones can even be better! Get quotes and compare deals from at least three companies. This will help you weigh in on their bid.

The best home insurance company is not necessarily the one with the cheapest proposal. Go for the policy that offers you the best value for your premium.

For your peace of mind, choose a trusted and experienced home insurance provider near you.

About The Author

Rachael Harper

Rachel Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.

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