Home owners insurance can be a bit confusing for new homeowners. We all hear the horror stories: home owners not taking out enough coverage or the right kind of coverage and then not being protected when their house burns to the ground. It pays to educate yourself about home owners insurance so you won’t be one of those homeowners stressing out about their coverage on their most important asset. To understand how homeowners insurance works, you must first understand the primary components of a homeowner’s insurance policy:
Structure - This part of your homeowner’s policy protects the obvious: your home’s structure. The structure aspect of your policy is there to provide coverage in the event of fire, smoke, lightening, theft and extreme weather. There are some types of weather conditions, such as floods, that are not covered under a standard homeowner’s insurance policy, so read your inclusions and exclusions carefully to make sure your coverage is comprehensive.
When choosing the coverage amounts for your homeowner’s insurance policy, make sure to take into consideration the fact that you are covering your home’s entire value – i.e. the cost of replacing your home if it were a complete loss. Your policy should not simply cover the remaining mortgage balance, as this would certainly leave you short if you needed to rebuild or completely renovate.
Personal Property - The personal property section of your homeowner’s insurance policy covers your possessions and personal property in the event of damage or theft. It is important to make a detailed inventory of your home’s possessions, including any jewelry, artwork or antiques. Make a written list, as well as a video tape of your home’s possessions, and store it in a safe place, away from your home. Doing so will make the process of claiming losses easier. Reviewing your personal inventory is also a good way of determining if your policy is adequate and if you require additional insurance on any valuable items.
Liability - the liability section of your homeowner’s insurance policy is incredibly important, as it provides compensation for liability claims and medical expenses. In other words, it protects you should someone become injured on your property.
