Understanding Homeowner’s Insurance

Tree fallen on top of house

Your home is your greatest investment, a place to call your own, and like any significant investment, you want to protect it. Rather than lying in bed at night worrying yourself with questions like, “What if our home went up in flames? What if someone broke in and took our valuables? What if a car drives through our garage door or a tree destroys our roof?” you can purchase homeowner’s insurance and put your mind at ease. This is the best thing you can do to protect your home from the unexpected.

Benefits of Homeowner’s Insurance

Home Repair: If a severe storm or a wildfire destroyed your home, homeowner’s insurance would cover you. This insurance safeguards you from having to pay out-of-pocket expenses when unfortunate circumstances strike. With homeowner’s insurance, the insurance company will cover the cost of your home’s reconstruction, ultimately restoring your home and property as close as possible to its original state.

Personal Belongings: Many homeowner’s insurance policies cover the personal belongings and valuables within the home, but they can also cover a wedding ring that was destroyed on your property while doing yard work. Homeowner’s insurance protects your possessions by either repairing or replacing the items.

Personal Liabilities: Homeowner’s insurance not only protects the structure of the house, it’s possessions and the property it occupies, but it also protects you if someone is injured on your property and decides to sue you. For example, if the pizza guy slips, falls and breaks his back on your frozen walkway on his way to deliver your pizza, homeowner’s insurance can help cover the cost of his injuries as well as any legal expenses. The same goes for if your pets. If your dog bites and injures your guest, you would receive some protection from legal repercussions when you have homeowner’s insurance.

Homeowner’s Insurance Policy: Standard Coverage

Dwelling Protection: This protection is for the structure of your house and covers repairing and rebuilding expenses if the damage was caused by a peril (see list below) already covered in the insurance policy. This type of coverage does not include damage from earthquakes, flood or normal wear. Earthquakes and floods can be covered through separate endorsements that you can add to your policy. Other structures: This coverage protects any structures on your property that are unattached from your house, such as a garage, shed, gazebo, treehouse, etc.

Personal Property: The coverage will repair or replace belongings that are damaged or stolen if they are under one of the covered perils. This can range from big items like furniture or a fridge to smaller items like dishes or jewelry. This can also include belongings that are lost or stolen while not in the home.

Loss of Use: After a devastating natural disaster, your family will need a place to go so this coverage will facilitate temporary living arrangements when a home is uninhabitable. Temporary relocation, meals, and anything else that falls under basic living would be covered.

Personal Liability: This covers others’ injuries and/or legal costs if you are found responsible for someone getting hurt on your property or if you are away from home.

Medical Payments Coverage: This will cover a non-occupant who may have been injured on your property. Regardless of who is at fault, this policy will offer coverage.

The Perils Homeowner’s Insurance Covers:

Now that you have seen what standard coverage looks like, here is an itemized overview of the perils covered in a policy. There are two common types of homeowner’s policies, HO-2 and HO-3. The HO-2 is a named peril policy, which is a list of problems the insurance will cover. Here are the 16 perils the HO-2 covers:

  1. Fire or lightning
  2. Smoke
  3. Theft
  4. Vandalism
  5. Windstorms and hail
  6. Damage from vehicles
  7. Damage from aircraft
  8. Weight of ice, snow, and sleet
  9. Freezing of household systems
  10. Riots
  11. Explosions
  12. Falling objects
  13. Volcanic eruptions
  14. Overflow or discharge of water
  15. Damage from artificially generated electrical current
  16. Sudden tearing, cracking, or bulging of home

An HO-3 policy covers a broader range of risks except those the insurer excludes.

Limits of Coverage and Deductibles

Homeowner’s insurance can protect you from having to pay overwhelming amounts of money when you encounter a disaster, however, there are limits to the amount of reimbursement you can ultimately receive. An insurance agent will help you determine the best coverage to buy in order to adequately cover your dwelling, personal liability and medical payments.

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