HOMEOWNERS
INSURANCE
Most people that own their own homes have
worked hard and long to get this asset.
Your home is not just a sanctuary for
you and your loved ones, but also an investment
for future generations, one that needs to
be protected: This is made possible
with a type of insurance known as homeowners
insurance.
Homeowners
insurance is property
insurance for homeowners.
It insures the dwelling itself, attached
or detached structures and personal content,
as well as liability. Homeowners insurance
protects your investment from catastrophic
events that may occur. While some people
confuse home insurance with maintenance
insurance and think that they can file claims
for wear and tear of their property, most
homeowners insurance companies do not cover
such claims and advise that their coverage
be reserved for major losses such as fire,
theft, wind, or hail.
The typical homeowners policy has two main
sections: Section I covers your property,
and Section II provides personal liability
coverage (to cover you in case of lawsuits
arising from things that happen on your
property). Almost anyone who owns or leases
property should have this type of insurance.
Often, homeowners insurance is required
by lenders as a requirement to obtain a
mortgage.
Types of policies include: Actual
cash value policies that pay to replace
your home and possessions minus depreciation
up to the policy limit; replacement
cost policies that pay the actual
cost of rebuilding/repairing your home and
replacing your possessions up to the policy
limit. There is no deduction for depreciation;
guaranteed replacement
cost policies that pay whatever it
costs to rebuild your home as it was before
the disaster even if it exceeds the policy
limit; and extended replacement
cost policies that pay a specified
percentage over the policy limit to rebuild
your home. Usual percentages are 20% or
25%.
The price you pay for Homeowners' insurance
can vary by hundreds of dollars, depending
on the insurance company. Companies offer
several types of discounts, but they do
not offer the same discount or the same
amount of discount in all states.
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