Maintaining continuous coverage of your property seems like the best way to protect your home and everything in and around it in an emergency or an incident. Your home is your most precious possession, and it would be most advisable to get comprehensive home insurance to ensure you’re always covered. 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 policyholders or their families caused.
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 natural disasters by purchasing an additional, separate policy. Maintenance-related problems are the homeowners’ responsibility.
4 Types of Home Insurance Coverage
A standard home insurance policy includes four essential types of insurance coverage.
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 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 you own are covered by your home insurance policy in case they are destroyed by insured disasters or stolen. The standard coverage provides 50% to 70% of the amount on the home structure and includes coverage for off-premises. Off-premises coverage protects your belongings anywhere 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 to provide your items to their full value. Standard home insurance also covers scrubs, plants, and trees; 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
Liability protection covers lawsuits in case policyholders, their families, and household pets cause property damage or bodily injury to other people. The coverage pays for court awards and the cost of defending the policyholder 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 if you choose excess liability protection. This includes higher liability limits as well as claims for slander and libel.
4. Additional living expenses coverage
Suppose 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. In that case, your home insurance policy covers the additional living expenses. It includes all additional costs like restaurant meals, hotel bills, and other living expenses you had during your home’s rebuilding phase. The amount of coverage for additional living expenses 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 several 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:
- Lightning
- Fire
- Hail
- Windstorm
- Explosion
- Civil commotion
- Riot
- Aircraft damage
- Vehicle damage
- Smoke
- Malicious mischief
- Vandalism
- Theft
- 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, plumbing, or any other household appliance.
- Accidental or sudden bulging, burning, cracking, or tearing of the automatic fire protection, air conditioning, 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 of renting. Aside from HO-3, there’s HO-8, which covers older homes; HO-2, which comes with limited coverage and is more aimed toward mobile homes; and HO-1, which isn’t widely available.
Renters Insurance Policy
If you rent your home, you need a special insurance policy – HO-4. It includes all the aforementioned perils and covers the policyholder’s personal belongings. If the policyholder or dependents cause damage to other persons, the renter’s insurance policy provides personal liability coverage.
Cooperative Units and Condominium Insurance Policy
Those 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, and coverage for 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 depreciation deduction.
- Replacement cost – provides coverage for repairing or rebuilding the home but can also cover the expenses of replacing possessions without the depreciation deduction.
- 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 damages or makes 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 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 an additional policy that directly addresses these extra 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
If you’ve experienced loss or damage to your home and 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 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 combining 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 peace of mind knowing that your home insurance policy covers 95% of claims.
- You can customize and tailor your home insurance policy to suit your needs and your family’s.
- The combination of home and personal belongings insurance offers high flexibility. There’s a wide range of different options to choose from.
- You can spread the cost of your policy every month without any additional or extra charges.
- If you need to make a claim, the insurance companies offer 24/7 customer support to help you anytime.
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 by 20%
- Lender-paid mortgage insurance
- VA loan
- Go with credit unions that provide benefits for qualified applicants
- Piggyback mortgages
- Physician loans