Home Insurance – The Ultimate Guide

Home insurance or homeowners insurance covers damages to a residential building, loss of possessions due to an insured peril, and personal liability in case of an injury to a third party while in your home or property. Given how comprehensive the coverage is, it’s important for all homeowners to purchase home insurance.

If you’re looking to shop for home insurance, make sure to check whether the policy offers the following coverage:

Property and Assets

Ensure that the policy covers damages to the interior and exterior of your home. You should also receive coverage for any assets that are within your home in case they are stolen or vandalized. Keep in mind that most insurers limit this coverage to between 50 and 70 percent of the insured value of the contents. If you have many valuables, you may want to check if the insurer offers add-ons to help you increase your coverage.

Personal liability

This covers you and your pets in case a third party files a lawsuit for damages to their property or injury to themselves caused at your home. It is recommended that you have a minimum cover of $300,000 on this liability cover.

Temporary Accommodation

If your house gets damaged to the extent that you have to move to a hotel or other accommodation while the rebuilding is in progress, the policy should cover these expenses as well.

The coverage that home insurance plans offer can be of three types:

– Cash value basis: Actual cash value policies cover the cost of rebuilding, replacing, or fixing up your home and all your contents, less depreciation. Depreciation refers to the current value of your contents and not purchase cost.

– Replacement cost basis: This covers the actual value of your assets/home without depreciation.

– Extended replacement cost basis: This is the widest cover since it will also take into account the inflation factor. Effectively, with this cover, your insurer will pay you more than the policy limits.

It is important to note that most home insurance policies do not cover claims as a result of “acts of God.”