Understanding Homeowners Insurance Policy Coverage

March 9, 2008 By Debbie Dragon

Homeowners insurance can seem complicated at first, but armed with a little information, you can understand and appreciate its’ value.  As with any insurance, you purchase it with the hopes that you’ll never need to cash in on it!

Most mortgage lenders require homeowners insurance; and many landlords are requiring their tenants to have some form of insurance, as well.

What Homeowners Insurance Policies Provide

A standard homeowners insurance policy will typically provide coverage for costs that are related to the following:

Interior & Exterior Damages:  if the outside or inside of your home is damaged by fire, lightening, hurricanes or vandalism (as well as other covered disasters) your insurance provider will compensate you enough to repair the house or even completely rebuild it if necessary. Damages caused by floods, earthquakes or from poorly maintaining your home is not usually covered.  These instances may be covered if you purchase additional riders or coverage options.

Damage or complete loss to personal belongings: Things like clothing, appliances and furniture, as well as other contents of your home are covered by homeowners insurance if they’re destroyed in an insured disaster.  Most insurance companies will cover you for 50-70% of the amount of insurance you have on the structure of your home.  This means if you insure the home for $200,000 you would have around $140,000 in insurance coverage for the contents of your home.   Make a list of everything in your home and their approximate values to see if you have enough homeowners insurance coverage.

Personal liability coverage for damage or injuries: If you or a family  member (including your pets!)  causes injury to another person, the insurance will cover those medical costs.  This coverage also provides compensation if someone in your family damages someone elses belongings.
 

Hotel or house rental while repairs are made:  if your house is destroyed, you will find this coverage to be your favorite coverage!  While the home is uninhabitable and being repaired or rebuilt, your homeowners coverage would reimburse you for the amount you pay in house rent or hotels, meals at a restaurant and any other incidental costs incurred due to being unable to stay in your own home.  Policies due impose strict daily limits as well as total limits for the amount of money they’ll provide for this coverage. 

How Much Does Homeowners Insurance Cost?

In 2005, the average homeowners insurance coverage in the United States was around $760, annually.  Premiums will vary based on how much coverage you choose to purchase, where you live, and the amount of liability protection you want to have.

Before choosing an insurance company, as with any insurance, you should do some comparison shopping and decide which company can offer you the best prices for the amount of coverage you wish to have.
 

Posted in home improvement, insurance

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