What is Homeowners Insurance?
Homeowners Insurance, also called Home Insurance, is a type of property insurance that covers damages or destruction to your residential property’s interior or exterior caused by the covered perils such as fire, smoke, vandalism, and windstorm. It also protects your personal belongings and assets within the insured property against theft. Homeowners Insurance also protects you if you get sued by a third party for an injury or property damage at your insured residential property like a home. Most mortgage lenders require a home insurance policy.
What Does Homeowners Insurance Cover?
Homeowners Insurance provides a variety of coverages to protect you, your residence, and personal belongings within your residence.
Property Damage Coverage
This coverage covers damage to the interior or exterior of your insured property caused by covered perils, such as fire, lightning, vandalism, hurricanes, and other covered disasters. It reimburses you for the repair, restoration, and even rebuilding cost of your house. Destruction or damages caused by floods, earthquakes, or other acts of God, are not covered by Home Insurance.
Personal Property Coverage
Personal Property coverage protects your personal possessions and belongings that were damaged or stolen. Some common items that personal property coverage covers include:
- Furniture
- Appliances
- Clothing
- Electronics
If you want to cover your jewelry collection, you may need to add special coverage to your Homeowners Insurance policy. With special valuable items coverage, you can protect your engagement rings, wedding bands, and diamond bracelets.
Personal Liability Coverage
Also called Liability coverage, Personal liability coverage protects you against claims or lawsuits filed by others for a third-party bodily injury or property damage incurred at your house. This coverage protects you from any damages caused by your pets to others. Personal Liability coverage helps you pay the legal costs, such as lawyer and court fees, to defend your case in court.
Additional Expenses Coverage
This coverage reimburses you for the additional living expenses if your insured residence becomes uninhabitable after getting damaged due to a covered peril. Additional Expenses coverage covers hotel bills, restaurant meals, or any other incidental costs you incur while waiting for your insured property to be inhabitable again.
Different Levels of Homeowners Coverage
Depending on the cost and amount of coverage of your home insurance policy, Homeowners Insurance coverage of three levels:
Actual Cash Value Coverage
Actual Cash Value provides coverage based on the current value of your residence and your belongings within it. For example, suppose your house gets damaged along with your personal belongings. In that case, the Actual Cash Value will cover the cost of your house plus your possessions after deducting the depreciation.
Replacement Cost Coverage
Replacement cost coverage covers the actual value of your residence and personal possessions without deducting depreciations which means you would be reimbursed for the original cost to repair or rebuild your home.
Guaranteed Replacement Cost Coverage
This is the most comprehensive level of Homeowners coverage. It reimburses you for repair or rebuilding costs of your home, even if it’s more than your policy’s coverage limit. Thank You Very Much!