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Homeowners Insurance: What It Is and What It Covers

Homeowner insurance or home insurance is the property insurance that covers your home and your assets. Your home can suffer damage or losses that can occur at any time, so it would be wise to have this insurance as soon as you buy a home. On the other hand, if you are thinking about getting life insurance, before you do, find out what are the common life insurance myths.

It is important to know that having homeowner insurance is not obligatory by law. Therefore, you don’t have to pay for it, but it is recommended because it provides multiple benefits. If you don’t have one and the damage occurs, you have to pay everything from your own pocket.

Also, you should be aware of the fact that lenders usually require having home insurance. So, if you plan on taking a loan and paying a mortgage, you will most probably have to pay home insurance, as well. This is not an uncommon practice since lenders just want to ensure that their investment is protected.

So-called insurance frauds are also not allowed by any means. Therefore, you can’t cause the damage on your property on purpose and then expect the insurance company to pay you for the damages.

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What does homeowner insurance cover?

Homeowner insurance doesn’t cover just damage to your home. Most insurance companies offer several types of coverage. Here they are:

1. Dwelling – As expected, this type of insurance covers the damage to your home. And that includes not only the house but all the structures that are attached to it like, for example, the porch.

2. Other structures – This refers to the structures that are not attached to the house but are an essential part of your property. These are the structures that can stand on their own. For example, it could be a shed or a fence.

3. Personal stuff – These are the belongings that were stolen or damaged in an event covered by the insurance.

4. Temporary living expenses – If your home is damaged in an event, you probably won’t be able to live there for a while. So, while the house is being repaired, people seek other places to live. And that can last for a while. During that time people pay for a hotel or rent other property. Those expenses are usually covered by the home insurance.

5. Medical expenses – If somebody gets injured on your property by the owner, a family member, or even a pet, the insurance covers those medical expenses to some extent (usually there is a limited amount).

6. Liability – If you unintentionally injure someone or you do that through neglect, the insurance got you covered to a limited amount.

Many people overlook all the benefits that this type of insurance can bring. That is because they are not aware of all the things it covers and how it can be a real life-saver.

What do insurance companies take into consideration?

The insurance companies have to evaluate the value of every home and assess the risk in the particular case. So, they have to take a lot of things into consideration.

Therefore, the insurance premium is different for every house. The amount of the insurance premium depends on several factors. And the premiums can cost several thousand dollars a year, depending on the circumstances.

The insurance companies especially take into consideration the following:

– costs to rebuild the home
– the overall state of your home
– distance to fire hydrants
– major injury risk structures like, for example, a pool
– what is the fire protection rating in your city or town
– the history of your claims, coverages, and limits.

But, you can lower the premiums if you install some additional safety measures like locks and alarms. Be sure to ask the insurance company what you can do to lower the premium. Maybe there is a discount if you combine two types of insurance into one bundle.

What home insurance doesn’t cover?

However, the home insurance doesn’t cover every damage and in these cases, if you want it to be covered, you would have to buy the coverage separately.

What you can do is to make sure you read all the small print containing terms and conditions in your policy. Maybe the insurer excluded some causes that you are not aware of. You have to be on top of it, otherwise, you will face an unpleasant surprise if the damage occurs. Assume nothing.

These are the causes that are usually excluded by insurance companies:

– Flooding
– Infestations – mold, fungus, vermin, birds
– Neglect
– Wear and tear
– Earthquake
– Landslide or sinkhole
– Nuclear hazard
– Power failure
– Government action or war.