What Is Homeowners Insurance And How Does It Work?
Homeowners insurance is a personal insurance policy that covers losses and damages to an individual’s house and assets in the home.
When you buy a home insurance policy, you are enter an agreement with an insurance company that you will pay your premium, either monthly or annually. In return, the insurance company with compansate you when the agreed loss or disaster occurs. Homeowners insurance can provide you a peace of mind, knowing that you are protected against unexpected property damage or loss.
Homeowners insurance is a necessity, not only because it protects your home and assets against damage or theft. Mortgage companies usually require borrowers to have insurance coverage for the full value of a property and won’t provide a loan without proof of it.
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The coverage provided by homeowners insurance policy
A homeowners insurance policy typically protects you against:
- Damage to a home’s structure. This means financial protection for the structure of a home as well as belongings in case of loss or damage. This usually covers damage due to fire, hurricanes, tornadoes, cyclones, typhoons, lightning, vandalism or other covered disasters. The insurer will compensate you so that you can rebuild or repair your house. Sometimes, freestanding garages or sheds on the property may require to be covered separately.
- Damage to interior property or personal belongings. Homeowners insurance also covers clothing, furniture, appliances, and most home contents if they get destroyed in an insured disaster.
- Additional living expenses. This means financial compansation for your additional living expenses. For example, while you are carrying out repairs to your home you might need to stay in a hotel. Depending on the agreed coverage, homeowners insurance policy might cover all those additional expenses.
- Liability protection. Homeowners insurance policy usually comes with liability protection. This is financial compansation you gets if someone get hurt while on your property. Even if your dog bites your neighbor, you are covered. Whether the bite occurred at your place or theirs, your insurer will pay for the medical expenses. If a visitor slips and fall at your stairs, the medical expenses will be covered.
Some insurance tips for homeowners
- First of all research several homeowners insurance companies to find which best fit your needs. Compare the different policies from different insurers and make sure you get enough cover for the value of your money.
- Do not only to consider the level of insurance that you need, but also what the policy excludes. Make sure you get enough protection.
- Different policy types usually cover different disasters. Understand what disasters the policy covers before committing to it. Generally, policies that cover more disasters cost more, but will also provide you financial protection from a greater number of disasters.
- Insurers are good at playing around with words to their benefit, so you should be extremely careful when reading the terms and conditions. It might be helpful to get an experienced someone to help you understand the terms and conditions, and to help you avoid small print pitfalls.
- Consider an extra cover for expensive or luxury assets such as jewellery, artworks or antiques.
- Make sure you have a good record of all the items in your home and keep receipts for the expensive items. This comes in handy when making a claim.
- Always close windows and lock doors at night or when you leave the property, even if everything is insured.
- Always remember that using your home as a business premise may invalidate your homeowners insurance policy.
- You may get insurance discounts for using home safety devices such as alarms. So, remember to research about each company’s discounts.
- If you change your home or lifestyle, like renovating a room or getting a new pet, you should notify your insurer to make sure that your policy still properly covers you.