We all dream of buying a house that is a haven for us. When we achieve it, there is always a chance that any damage could happen due to an incident.
So what could we do to protect our dream? That’s where Homeowners or Home Insurance comes forward.
What if we tell you that earlier, home insurance was not something that people knew of. There was only ‘fire insurance’ that people would get to protect their family and house against fire incidents.
Homeowners insurance became a separate term as it now covers more than fire incidents. Let’s find out what it is all about.
How Does Homeowner Insurance Work?
As the name suggests, your Home Insurance will cover the expenses of any damage caused to your house. Let’s say your house comes under flames or any other insensitive incident. You won’t have to worry about the finances. Your insurance company will cover the interior and exterior damage expenses.
Your home insurance is not all about your house protection. It also covers any injury that happened to your family at your property, even if it’s your pet. What matters the most is that it includes liability coverage as well.
Let’s take it this way when somebody gets injured at your place or hers by you or your family; your insurance policy will rescue you.
What happens if your pet makes a little mischief to your neighbor? Bite him or intrude in his house and cause any damage? Here comes the homeowners’ insurance to save the day!
Last but not least, your home insurance also covers your hotel rent when your house is under re-construction.
Type of Homeowners Insurance
Not every insurance works the same way. There are different plans and coverages. You should choose according to your budget and how much coverage your house needs.
The three common types of home insurance are;
Basic Form:
This type of insurance is relatively cheaper and more affordable than others. There will be only a few items listed on your policy list that your insurance company covers. Such insurance suits more to those who have small cottages.
Broad Form:
This type of insurance coverage is a bit more than the basic ones. It includes a range of bigger items like buildings, garages, greenhouses. It also covers certain things that your insurance company has on your list.
Comprehensive Form
Comprehensive Form is the most expensive and extensive of all types. This type of coverage is also known as ‘All risk’ coverage. It covers all your house expenses and damage to your belongings. It might have certain items in the list that do not come under the coverage.
Homeowner Insurance :Types of Coverages
Home insurance policies provide two types of coverage.
- Actual Cash Value
In this type of coverage, your insurance policy covers the cost of your house along with your belongings. But it happens in such a manner that the price includes how much value your belongings and home currently have and not what you have paid for them. (Deducting depreciation)
- Replacement Cost
This coverage includes the actual cash value of your belongings without any depreciation. This type of coverage allows you to reconstruct your place according to its original value.
What Is Not Covered By Home Insurance?
There are certain events your insurance company does not cover. Natural disasters like floods and earthquakes cause too much damage. The home insurance policies do not include expenses of damage caused due to these natural disasters.
Some insurance policies have an extra coverage option for such events. For example, you can have flood or earthquake coverage included in your package. These additional coverages are suitable for those who live in high-risk areas.
The homeowners’ insurance does not cover expensive expenses for theft or vandalism. Jewelry, artworks, and other costly valuables are not on your coverage list. But you can always get them included in your package if you have such items in your home.
Pros and Cons of Home Insurance
Let’s talk about some pros and cons that you may face while buying home insurance.
Pros of Homeowner Insurance:
- Covers huge expenses of damages that you can’t afford.
- Gives coverage for personal belongings.
- Includes liability coverage in case of any injury caused to others.
- Covers your pet incidents too.
Cons of Homeowner Insurance:
- Does not cover expensive valuables like jewelry artwork.
- The insured had to buy extra coverage for flood and earthquake damages.
- There might be some items in the lists that the insurance policy won’t cover.
