Homeowners insurance is a vital protection against unexpected losses or damages, like fires or burglaries, that can affect your property. While it’s not legally required, most mortgage lenders insist you have it to ensure the property’s safety. So, what does homeowners insurance cover, and how do you choose the best plan for your family?
Many people pay their insurance premiums through an escrow account as part of their monthly mortgage payments. This means you pay your lender, who then puts the insurance part into an escrow account and takes care of the payments when your insurance bill is due.
On average, homeowners insurance costs about $1,428 a year for $250,000 worth of coverage for your home. However, this amount can vary depending on factors like your location, coverage limits, credit score, and claim history.
WHAT DOES HOMEOWNERS INSURANCE COVER?
Homeowners insurance plans can be tailored extensively, but they usually include some core elements that determine what the insurer will pay for.
Coverage includes DAMAGE TO THE INTERIOR OR EXTERIOR OF YOUR HOUSE. If your home is damaged by covered events like fires, hurricanes, or lightning, insurance companies will pay for repairs or even a full rebuild. However, damages from floods, earthquakes, and poor home maintenance typically aren’t covered. You might also need separate coverage for additional structures on your property, like detached garages or sheds.
Items inside your home, such as clothing, furniture, and appliances, are also covered if they’re destroyed by a covered event.
Personal liability coverage protects you if someone else is injured on your property. For example, if your dog bites a neighbor, your liability coverage would pay for their medical bills.
If your home needs significant repairs or rebuilding, homeowners insurance can help cover additional living expenses during this time, such as rent, hotel stays, and restaurant meals.
WHAT ISN’T COVERED BY HOMEOWNERS INSURANCE?
Standard policies typically don’t cover certain natural disasters like floods and earthquakes; you need separate insurance for those.
TYPES OF HOMEOWNERS INSURANCE COVERAGE
There are different types of standard homeowners insurance policies, labeled HO-1 through HO-8, each offering varying levels of protection. The HO-3 policy is the most commonly chosen type, typically covering the dwelling, other structures, personal property, liability, medical payments, and additional living expenses.
When choosing the best homeowners insurance policy, think about your specific needs. For instance, if you have a pool or a trampoline, you might need higher liability coverage. It’s wise to shop around, compare various companies, and read each policy’s details carefully before making a decision.
Remember, homeowners insurance protects your most valuable asset—your home. As you look for a policy that fits your needs, keep in mind the specifics of coverage can vary. It’s important to understand what’s included in your homeowners insurance, what basic coverage offers, and what additional features you might need. Make an informed choice to ensure you and your home are well protected.