Protecting Your Beloved Possessions

3 Things You Need to Understand Before Getting Homeowners Insurance

Buying a home is an interesting venture and a huge investment. One way to protect your property is through homeowners insurance. These policies cover your home, personal items, structures on your property, medical payments, and personal liability claims. Here's a simple guide to help you get the most appropriate homeowners insurance for your home.

1. Understand the Different Types of Homeowners Coverage

When choosing homeowners insurance, you must bear in mind that the least costly policy will give you little coverage. The main forms of homeowners insurance in the U.S. are HO-2 through HO-8. These policies offer various degrees of protection depending on your specific needs.

The main levels of coverage are actual cash value, replacement cost, and guaranteed replacement value. Actual cash value caters to the current market value of your house and belongings. On the other hand, replacement cost covers the cost you incurred for your home and possessions and doesn't consider depreciation.  

With the guaranteed replacement value, you're guaranteed the cost of rebuilding your home even though it exceeds your policy limit. It may be best to get guaranteed replacement because if the cost of rebuilding your home increases, the initial price you paid for your policy will not matter.

2. Understand What's Not Covered

It's important to note which things aren't covered in your policy. Earthquakes, floods, and landslides may not be included in homeowners insurance. Understand the limits of all the home insurance policies before you choose one. This will help you determine which exclusions you can live with.

In some cases, a standard homeowners policy may not be enough for you. In such cases, you may need to take both a standard policy and an additional rider insurance policy. Rider insurance adds more benefits to your standard policy.

3. Understand the Implications of Your Policy

When purchasing homeowners insurance, it's smart to familiarize yourself with common terms. You need to understand deductibles, liability coverage, and personal property. A deductible is what you pay from your pocket before the insurance company can cater for the remaining cost. It's better to pay a high deductible so your premium costs are low.

Liability coverage means that the policy will cater for legal bills and medical expenses in case someone sustains injuries on your property because of your negligence. Lastly, personal property implies the property items like clothing, furniture, and electronics that are covered by your policy. Understanding these terms will help you determine what to claim in case of an accident or incident.

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