In case of an emergency or an incident, maintaining continuous coverage of your property seems like the best way to protect your home and everything in and around it. Your home is your most precious possession, and it would be most advisable to get comprehensive home insurance to make sure you’re covered at all times. With that in mind, here at Market Pro Secure, we felt obliged to give you all the details regarding home insurance, what it covers, and how it benefits you.
What Is Home Insurance?
Home insurance is a policy that includes a range of selected packages of insurance coverage. That means that your home insurance policy covers your property from all damage. It also provides coverage for legal responsibility and liability for any property damage and injuries sustained by other people that were caused by policyholders or their families.
This coverage also includes any damage caused by pets. In case of any natural disasters or environmental perils that could cause damage to your property, your home insurance policy has you covered. But, there are some exceptions – poor maintenance, earthquakes, or flooding aren’t covered by standard home insurance policies. However, it’s possible to protect your property from the aforementioned natural disasters by purchasing an additional, separate policy. As for the maintenance-related problems, those are the homeowners’ responsibility.
4 Types of Home Insurance Coverage
There are four essential types of insurance coverage that a standard home insurance policy includes.
1. Coverage for home structure
If your home gets destroyed or damaged by lightning, hail, hurricane, fire, or any natural disaster stated in the policy, your home insurance pays to rebuild or repair your home. However, this coverage doesn’t include any payment for damages caused by routine wear and tear, earthquake, or a flood. If you have any additional structures on your property, such as a gazebo, a tool shed, or a garage, these structures are also included in your home insurance policy.
2. Personal belongings coverage
All personal items such as sports equipment, clothes, furniture, jewelry, and everything else that you own; this is all covered by your home insurance policy, in case they are destroyed by insured disasters or stolen. The standard coverage provides for 50% to 70% of the amount on the home structure, and it also includes coverage for off-premises. Off-premises coverage protects your belongings anywhere in the world unless you’ve stated otherwise. While personal belongings coverage covers expensive items like silverware, furs, and jewelry, there is a dollar limit in case of theft.
If you want to ensure these items are in full, you can purchase a special personal belongings floater that allows you to ensure your items to their full value. Standard home insurance also covers scrubs, plants, and trees, and the general coverage goes up to $500. Perils included in the policy are falling aircraft, riot, vandalism, explosion, lightning, fire, and theft, while disease and wind damage aren’t included.
3. Liability protection
In case of any property damage or bodily injury caused to other people by policyholders, their families, and household pets, liability protection covers against any possible lawsuits. The liability coverage pays for the court awards and the cost of defending the holder of the insurance policy in court. It’s important to mention that the amount of coverage goes up to the policy limit.
The liability coverage extends beyond the home and provides protection anywhere in the world. The liability limit is usually around $100,000, although it can be higher in case you choose to go with excess liability protection. This includes higher liability limits as well as claims for slander and libel.
4. Additional living expenses coverage
In case your home becomes inhabitable due to damage from any insured disaster like a storm or a fire, and you’re forced to live away from your property, the additional living expenses are covered by your home insurance policy. It includes all additional costs like restaurant meals, hotel bills, and all other living expenses that you had during the rebuilding phase of your home. The amount of additional living expenses coverage differs. Not every insurance company offers the same coverage.
Types of Homeowners Insurance Policies
While there’s a fair standard for different types of homeowners insurance policies, individual companies and countries offer insurance policies that differ in detail. These policies are considered deluxe or standard, depending on what additional coverage they provide. Every homeowner has a number of different insurance solutions to choose from. The most popular home insurance policy that most homeowners prefer is the HO-3. It combines three types of insurance coverage:
- Personal liability
- Personal belongings
- Home structure coverage
What matters most is that HO-3 also includes protection from different perils or disasters. This protection provides coverage from:
- Civil commotion
- Aircraft damage
- Vehicle damage
- Malicious mischief
- Volcanic eruption
- Falling object
- Weight of sleet, snow or ice
The following damages are also included:
- Accidental overflow or discharge of steam or water from within an automatic fire-protection sprinkler system, air conditioning, heating, or plumbing, or any other household appliance.
- Accidental or sudden bulging, burning, cracking, or tearing of the automatic fire protection, air conditioning, or hot water or steam heating system.
- Freezing of a household appliance, fire protection, air conditioning, heating, or plumbing system.
- Accidental or sudden damage from a man-made electrical current.
HO-3 home insurance is usually purchased by homeowners who rent their living premises to renters. They use this insurance policy to cover the risks that might arise from renting. Aside from HO-3, there’s HO-8 that covers older homes, HO-2, which comes with limited coverage and is more aimed toward mobile homes, as well as HO-1, which isn’t widely available.
Renters Insurance Policy
If you are renting the home you live in, there is a special insurance policy – HO-4. It includes all the perils we mentioned before, and it also covers the personal belongings of a policyholder. In case the policyholder or dependents cause any damage to other persons, the renter’s insurance policy provides personal liability coverage.
Cooperative Units and Condominium Insurance Policy
Those persons who own cooperative units and condominiums can purchase the HO-6 home insurance policy. It includes protection against all insured perils and disasters, personal liability coverage, as well as coverage for the co-op units and condominium structures. Both the HO-4 and HO-6 include additional living expenses.
Levels of Coverage
When it comes to the level of coverage, there are three coverage options to choose from:
- Actual cash value – provides the coverage needed to replace possessions or the home. This coverage level is reduced for a deduction for depreciation.
- Replacement cost – provides coverage for repairing or rebuilding the home, but it can also cover for the expenses of replacing possessions without the deduction for depreciation.
- Extended or guaranteed replacement cost – provides the highest level of coverage. It includes all costs related to rebuilding the home before any insured disaster or fire damaged it or made it inhabitable.
This level of coverage extends beyond the policy limit, which covers any unpredicted and unexpected situations that might happen during the rebuilding. These situations include:
- The shortage of materials needed for rebuilding
- Sudden increases in construction costs
- Other unexpected situations
This level of coverage doesn’t cover for the expenses of home improvement or upgrading according to the current building standards and codes. However, it is possible to include these additional expenses by purchasing the additional policy that directly addresses these additional costs. Many home insurance companies offer extended home insurance policies that cover the expenses of rebuilding the home even over the limit. Still, this coverage covers only a certain percentage over the limit.
Benefits of Home Insurance
In case you’ve experienced loss or damage to your home, and you need to repair or rebuild it, your home insurance covers the expenses. The best thing about home insurance policies is that they are generally flexible and offer a wide range of covers that are designed to cover many different and individual needs of policyholders. You can choose to cover only your home or your contents. If you ask us at Market Pro Secure for advice, we’d recommend that you combine the two to ensure your peace of mind. If you choose to do so, here is how insuring your home and contents benefits you:
- You can enjoy your peace of mind knowing that 95% of claims are covered by your home insurance policy.
- You can customize and tailor your home insurance policy to better suit not only your needs but the needs of your family.
- The combination of home and personal belongings insurance offers a high level of flexibility. There’s a wide range of different options to choose from.
- You can spread the cost of your policy on a monthly basis without any additional or extra charges.
- If you need to make a claim, the insurance companies offer 24/7 customer support that can back you up at any time.
Best Home Insurance Companies
- Allstate – perfect for new homebuyers
- Amica – most excellent customer service
- State Farm – personalized online quote
- Nationwide – replacement coverage you can count on
- The Hartford – for green homes
- Liberty Mutual (Review) – full-time inflation protection
- Progressive – protect your boat
- USAA – best for war veterans, military members, and their families
How to Avoid Paying for Home Insurance?
You can avoid paying home insurance in several ways:
- Reduce your home purchase for 20%
- Lender-paid mortgage insurance
- VA loan
- Go with credit unions that provide benefits for qualified applicants
- Piggyback mortgages
- Physician loans