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If you’re a homeowner or plan to become one, you probably understand the need for homeowner’s insurance. Your home is a tremendous asset, and insurance is there to protect it. If you’re financing your home, your mortgage lender will require house insurance. In fact, they’re probably making the payments for you to ensure the coverage stays active.
Home insurance includes several components you may not even realize. There’s coverage for the main dwelling and your personal belongings, but you also have a liability portion and coverage for additional living expenses. We’ll explain the different portions in detail.
Main DwellingThis is the major portion of your homeowner’s insurance. This insurance protects your home from damage due to fire, storms, lightning, and other unforeseen calamities. Your policy will assign a value to rebuild your home, which is usually 80 to 100% of the replacement costs.It’s important to know that flood damage is not automatically included. Water damage from rain or storm can be covered, but if water is coming from the ground up, only flood insurance will pay for the damage caused. It’s a good idea to add a rider to cover flooding even if you live in a low-risk area, because flooding is the most common property claim.
Personal PropertyThe main dwelling of your home is worth a lot, but your personal property also has significant value. Think about the furniture and the appliances in your home, along with any personal belongings. Your insurance may reimburse you for the actual value of the items, or they may pay for replacements, depending on the type of coverage you have. Replacement cost coverage is more expensive, which is why it’s not standard.If you have jewelry, electronics, fine art, or other valuable items, you may need to purchase extra coverage. We also recommend keeping records and pictures of your valuables to furnish as proof if you need to file a claim. You can keep these documents electronically or store it in another location.
Liability ProtectionLiability protection is the one coverage you never want to be without. If someone gets hurt on your property, you may be liable. Lawsuits can get expensive, even if you eventually prevail. Liability protection also kicks in if someone else’s property was damaged because of your actions or inactions. If you have a pool or a trampoline, make sure they’re mentioned in your homeowner’s insurance policy. Liability coverage is the best protection for your assets. For high-net-worth individuals, it’s probably a good idea to get an umbrella liability policy. You don’t want to risk losing everything you’ve worked for when something bad happens.
Additional Living ExpensesIf an unforeseen catastrophe makes your home uninhabitable, your home insurance policy can cover additional living expenses you incur. These living expenses can include hotel rooms or temporary rentals until your home can be repaired and you can move back in.
Is It Worth It to Have Homeowner’s Insurance?Yes. Hopefully, you’ll never need your homeowner’s insurance policy, and it just provides peace of mind. But when something happens, you’ll be glad you have it. Without insurance, you could lose your home and everything inside of it to one catastrophe you couldn’t foresee or avert.
Do You Need Home Insurance with a Mortgage?Yes. In fact, lenders typically require you to carry homeowner’s insurance. They will not underwrite the loan if the house can’t be insured. They also typically pay the insurance premiums and add the monthly cost to your mortgage payment to ensure coverage doesn’t lapse. Home insurance protects the lender’s asset, your house.
When Should You Purchase Home Insurance?If you own a home, you want home insurance to protect you from unforeseen disasters. Even if you don’t have a mortgage, you probably can’t afford to rebuild your home. Home insurance also adds that liability portion, which protects your other financial assets, too.
At Kinder’s Insurance Agency, we pride ourselves on finding the best coverage for you. Don’t leave your home insurance policy up to chance. Call us today to find the best coverage for your needs.