What Does Homeowners Insurance Protect?
Each home insurance policy is different, but standard policies usually provide:
- Broad coverage for damage to your house and any permanent structures on your property (unless the cause of the damage is specifically excluded in your policy.)
- Damage to your personal property due to causes specified in your policy.
- Limited coverage which is available for items like stolen jewelry. Coverage amounts vary depending on your state of residence.
- Additional coverage for valuable items which can be purchased through endorsements to your homeowners policy.
What is home insurance?
Homeowners insurance, or home insurance, compensates you for losses to your home and your possessions inside it, so purchasing a homeowners policy provides added security for your investment. Home insurance also protects you if you're legally liable for someone's injuries on your property, as well as from financial losses caused by storms, fire, theft and other events outlined in your policy.
Why buy condo insurance?
Home insurance isn't your only option when it comes to protecting your belongings. When you own a condominium, you — not your condo association — are responsible for what's inside your condo. That's why having a personal condo insurance policy is important.
Maintain Adequate Coverage
Buy enough coverage to avoid a major financial loss if your home is severely damaged or destroyed. This means keeping a realistic dollar amount of coverage on your house.
Replacement Cost Coverage of Your House
Most of the standardized policies provide replacement cost coverage for your house, up to your policy´s dollar limits. Replacement cost is what you would pay to rebuild or repair your home, based on current construction costs. Replacement cost is different from market value. It does not include the value of your land. If you are not sure of the amount it would cost to rebuild your home, your company or agent usually has construction cost tables to help you figure the cost.
To receive full payment (minus your deductible) for a partial loss, such as a storm damaged roof, you must insure your house for at least 80 percent of its replacement cost. If you insure your house for less than 80 percent of the full replacement cost, the insurance company will pay only part of the expense of a partial loss.
Unless you buy an endorsement increasing your coverage, most policies only provide actual cash value coverage. Actual cash value is the replacement cost of your property minus depreciation. If your home is destroyed and you only have actual cash value coverage, you may not be able to completely rebuild it.
Sometimes, despite your best efforts, things go wrong. Having the right insurance is critical. Your renter's or homeowner's policy covers many things, but still may be inadequate. For example, if a valve bursts inside your home, your homeowner's policy will probably cover the damages. If the pipe from the sewer or water system breaks outside your home you may only be covered if you have flood insurance.
A homeowners insurance policy covers both property and liability. It protects your home, personal property, and personal liability in case of damage or total loss. It is designed to pay homeowners for damages to your home and its contents. It can also protect you from financial liability if someone is injured on your property. Shop around - Insurance is a highly competitive business and the price you pay for your homeowners insurance can vary by hundreds of dollars, depending on the insurance company you buy your policy from.