A Beginner’s Guide to Home Insurance

Home insurance protects your possessions and home from theft and damage but buying home insurance as a first-time homeowner can be overwhelming. Here’s what you need to know. Though policies are customizable, standard home insurance policies will offer coverage for at least the following

Damage to The Interior or Exterior of The Property

This includes damage caused by fire, hurricanes, lightning, vandalism, or other disasters specified in the policy. Remember to account for freestanding constructions like garages or sheds on your policy. If you want protection from natural disasters like floods and earthquakes, you may need to include it in your policy as a separate rider.

Loss of Clothing/ Furniture/ Appliances/ Valuable Contents in Your Home

The amount of coverage for loss of these items is determined by how much your house is insured for. If you have high-priced possessions like fine art or jewelry, you can itemize these possessions and purchase a separate rider within your home insurance to cover damage or loss. Most companies will provide anywhere between 50% to 70% of what you paid for your home insurance.

Liability Coverage

This protects you from lawsuits that others have filed. For instance, if a guest trips on your porch and decides to sue you, your policy will offer you financial protection. Off-premises liabilities include a loss or damage incurred while off your property (for instance, your dog biting your neighbor on her lawn).

Additional Living Expenses

These include living at a hotel or rented accommodation while your property is being repaired. Most companies impose a daily and total expense limit with this provision.

The U.S. has standardized the forms of home insurance (HO-1 through to H08). Some of the more common coverage types include actual cash value (cost of your house plus the value of what your belongings are worth when the damage or loss occurred), replacement cost (cash value of your home and possessions without deducting the depreciation) and guaranteed replacement cost (whatever it costs to repair your home, even it’s more coverage than you purchased). The latter is the most comprehensive.

Remember to read the terms of your policy carefully so you purchase coverage that protects you adequately in unforeseen circumstances.