If you are buying your home on a mortgage, the mortgage lender will likely require you to have home insurance. But regardless of whether it’s required or not, it’s a good idea to purchase homeowners insurance. Here’s what you should know about home insurance.
What Is Home Insurance?
Homeowners insurance is a multi-coverage policy that financially compensates you in case you need to repair or replace your home or personal belongings after a covered loss. These policies typically also include liability coverage.
What Does Home Insurance Cover?
Basic homeowners insurance policies offer the following types of coverage to policyholders:
Dwelling Coverage: This covers damage to your home or any structures that are attached to your home.
Other Structures Coverage: This part of your policy covers the stand-alone structures that are within your property but not connected to your home.
Personal Belongings Coverage: If your personal belongings are damaged or stolen due to an event that is covered by your policy, you will be compensated for the loss.
Additional Living Expenses Coverage: If your home is temporarily inhabitable due to a covered loss, your policy will pay for your living expenses.
Liability Insurance: If unintentionally injure someone, your home insurance policy will offer you coverage.
Medical Payments Coverage: If someone injures themselves on your property, your policy will pay for their medical expenses.
Keep in mind that standard homeowners insurance policies do not cover incidents like floods and earthquakes.
How Much Home Insurance Should You Opt For?
Don’t make the mistake of choosing the coverage amount based on how much you paid to buy your home. Your policy should always offer enough coverage to rebuild your home in its entirety. If you are worried about the cost of the policy, remember that it can really help to shop around and compare the prices of different policies. Many insurance companies will also more than likely offer you a discount on your premium if you install safety features like deadbolt locks and burglar alarms.
Keep in mind that your home isn’t an asset you can easily replace if it is damaged or destroyed, so it’s best you protect yourself financially by purchasing homeowners insurance, despite the cost.