By: Emily Ferreira, Managing EditorOne of the most important things you can buy for your home is a home owner insurance policy. Fortunately, there are many policies available to choose from with various insurance companies. Determining which coverage options best suit specific needs will make it possible to build the perfect individualized home insurance policy.
Basic Coverage Options
A basic home owner insurance policy covers the structure of your house. This protects you from fire, storms and other natural disasters. This is the most fundamental coverage available and generally covers the cost of rebuilding a home.
When choosing coverage, it is important to know what you have and how much it is worth. Many people initially try to insure their home for the amount they paid for it, but this figure is seldom accurate.
When initially purchasing a home, you pay for the building and the land where it sits. Since you will never have to rebuild the owned land, home insurance is unnecessary. Therefore, make sure the coverage amount equals the value of only your home.
Most insurance companies will also sell policies to cover personal belongings. Going through possessions and determining how much they are worth can give a good idea of how much coverage should be purchased for this purpose. This policy will help replace basic belongings, like furniture, clothes, dishes, electronics, etc. It has been estimated that the average family has belongings in the home that will cost up to $60,000 to replace. The only way to know for sure the replacement value of those items would be to take inventory.
Another common home owner insurance policy option is liability insurance. These policies are becoming essential in today’s “sue-happy” culture. They cover injuries and damages that occur on personal property to other people.
When someone hurts himself or herself on your property, their medical expenses can be covered by a liability policy. They simply have to submit their bills for consideration and the insurance company will pay them. This can save a considerable amount of time, effort and frustration that is associated with litigation.
Other things covered by liability insurance includes damages you or your family do to other peoples’ property. If your child ruins the neighbor’s carpet, liability insurance can help cover the replacement costs. This allows you to easily do the right thing and maintain a civil relationship with neighbors.
These policies make up the general coverage available at almost every home insurance company in the country. If you live in an area that is prone to a variety of situations, consider the additional options outlined in the next section.
Additional Options
Mother Nature is one of the few untamable aspects of our modern world. Despite the best efforts of many, we cannot control weather patterns or the flow of the many waterways. Floods and other natural disasters are widespread and this is will never change.
Additional home owner insurance coverage can in preparing for these weather hazards. A traditional home owner insurance policy will not cover all major natural disasters. Flood and earthquake damages are generally covered under separate, specialized policies. These policies generally offer less expensive insurance quotes because of their limited scope and coverage.
Other policies specialize in particular disasters that might be common to your region. Tornado damage in the Midwest is very common. Special policies that cover tornado damages are frequently available from insurance companies that sell primarily in Tornado Alley, although tornados have been recorded in nearly every state in the U.S.
Additionally, there are policies available for people who are concerned about where they might live temporarily in the event their home is deemed unlivable under a covered plan. Rebuilding a home takes a considerable amount of time. Renting an apartment or staying in a hotel can be incredibly expensive, especially if you are still making a mortgage payment. Having an insurance policy that reimburses for these expenses can be a lifesaver.
Homeowners are not the only ones who need to protection. Many renters believe that their landlord’s home owner insurance policy covers personal belongings. In fact, these policies only cover the actual structure of the building and none of the personal belongings.
Renter’s insurance is a great way to protect your personal belongings and is relatively inexpensive. Having a policy to insure your belongings against fire, theft and vandalism can save a fortune in replacement costs.
Home Insurance Costs
Home insurance rates are based on many things. The amount of coverage and the policy type wanted for purchase are going the main considerations for home insurance cost.
The value of a home is another consideration to take seriously. The replacement value of a home should be the sole determination of how much insurance coverage is needed for your home. The replacement value is not the amount of money paid for the home, but the actual number of dollars required to rebuild the structure of that home.
Basic policies are going to be the most expensive ones. These typically range from $200 to $500 for an average residence. Special policies that cover weather related damage and renter’s policies are going to be much cheaper, generally never reaching more than $150.
Final Thoughts
Having a good home owner insurance policy can lead to peace of mind in cases of damage or destruction. Choosing the right policy can be difficult, but this is very important for the future of the home and financial condition after the event.
Don’t be afraid to spend the additional time to figure out the type and value of the policy needed to protect your financial condition. Taking the time to find and buy the right policy will be one of the best decisions made in your life.
