What to Consider When Buying Homeowners Insurance

April 20, 2020

Whether you are buying your first home or have owned many, having homeowner’s insurance is an important part of protecting your home. It can protect the structure of your home as well as your valuables in case of damage. Different variables can change the amount it costs to cover your home – it can protect both your valuables and provide coverage for legal liabilities. Homeowners insurance covers four different areas: the home’s structure, personal belongings, liability protection, and personal expenses. 

Coverage for Your Home’s Structure

Policy for your home’s structure is to repair or rebuild from damages done to your home from fire, hurricanes, hail, lightning or other incidents outlined in your policy. However, this does not cover damages caused by flooding, earthquakes, or mismanagement of the property. Most policies will also cover structures that are part of the property, such as a stand-alone garage or tool shed. An important tip is to purchase enough coverage to rebuild your home.

Coverage of Your Personal Belongings

If your personal belongings such as furniture, clothes, valuables, and other items are stolen or otherwise damaged, they can be covered by your personal belongings policy. Coverage is generally 50 to 70 percent of the insurance policy on your home. A good way to know if this is enough coverage is to create a home inventory. This policy also generally covers items stored off property, which allows policy holders to have protection on their belongings anywhere in the world. 

Liability Coverage

Liability protects against lawsuits for bodily injury or property damages caused to other people or their property. This policy even pays for damages caused by pets. A liability coverage policy can also provide no-fault medical coverage, so if someone is injured inside your home, they can submit medical bills to your insurance company without a liability claim being filed against you. 

Coverage of Personal Expenses

Personal expenses, or additional living expenses (ALE), helps pay for costs of living away from home if it has been damaged by a disaster covered in your policy. This coverage includes the cost of hotel bills, meals and other expenses that fall outside of usual living expenses while your home is being repaired or rebuilt. While some of these policies have a spending or time limitation, it is separate from the coverage available to rebuild your home. So, if you use up all of your ALE, your insurance will still be able to rebuild your home up to the amount of coverage your policy has. 

Sources:

i.i.i.

NAIC