As a homeowner, you want to protect your investment and do what you can to keep your finances in good condition. And, for that, you need homeowners insurance.
What Is Homeowners Insurance?
Simply put, homeowners insurance offers homeowners like you financial protection in case your home or personal belongings become damaged. It typically includes coverage that can help pay for repair or replacement costs should your home or personal items become damaged by covered perils. Depending on the type of policy you purchase, homeowners insurance may also offer additional protection when it comes to liability.
What Does Homeowners Insurance Cover?
Homeowners insurance comes in several forms with varying degrees of coverage. In general, though, you can expect your policy to cover your dwelling, other structures on your property, your personal belongings, and liability.
Your Dwelling
A standard homeowners insurance policy should offer dwelling protection. This pertains to the structure of the home itself, such as its walls, foundation, and roof. In some cases, dwelling protection extends to other attachments. Some examples of attachments include decks and garages.
It is worth noting that protection is limited to the covered perils of the policy. Most policies include natural disasters like electrical storms and wind under their covered perils. They can also include home fires, theft, and vandalism.
For example, if your garage has been vandalized, your policy should help pay for the cost of repairs. In the event of a home fire, your policy should also cover the cost of rebuilding your home and any additional living expenses while your home remains uninhabitable. Of course, this is subject to policy limits.
Other Property Structures
Dwelling coverage offers protection to attached structures like decks and garages. But, what about those not affixed to the home itself? This is where other property structures coverage comes into play.
With this type of coverage, which usually comes as part of most standard homeowners insurance policies, your pool or shed can be protected. Again, your policy will only pay for damages as a result of covered perils. So, if your shed becomes flooded, and floods are not included in your covered perils, your policy won’t cover the cost of repairs.
Your Personal Property
Standard home insurance policies don’t just protect the structure of your home — they also protect the items you have inside. For example, if a home fire breaks out and damages your sofa, your policy should help pay for the cost of replacing it, provided home fires are a covered risk. The same principle applies if someone breaks into your home and steals your computer.
Coverage for your personal items is not always comprehensive. Thus, many providers offer additional protection for certain high-ticket items such as expensive furs, jewelry, and collector’s items that extend the policy limit.
Liability
Liability protection comes standard with most homeowners insurance policies, too. This means your policy can help pay for related expenses should a guest injure themselves while on your property. Insurance normally helps pay for medical bills as well as the injured’s loss of income. If they sue you, your policy should also be able to pay for legal fees. Many policies also offer protection in case you break something in someone else’s home.
What Does Homeowners Insurance NOT Cover?
Standard homeowners insurance policies don’t cover damages as a result of earthquakes or floods. For these risks, you will need to purchase separate flood insurance and earthquake insurance.
Additionally, a standard policy also won’t cover any damages that you cause. For instance, if your appliances become damaged as a result of poor maintenance, that’s on you. Your policy will not pay for the cost of repairs or replacement, which means you will have to pay out of your own pocket.
How Much Does Homeowners Insurance Cost?
Several factors can influence the cost of homeowners insurance. These include the value of your home and personal property as well as the features of your home. In addition, the coverage you choose can also dictate how much you will need to pay. Generally, the more comprehensive your coverage is, the higher the premium. If you have a high coverage limit, that can also affect the cost of your policy.
That being said, the average cost of homeowners insurance is around $1,400 per year. The good news is, you can normally ask your provider or agent for policy discounts.
Does HOA Insurance Cover My Home?
If you live in a homeowners association, you might wonder whether the association’s master policy can cover your home as well. In general, HOA insurance does not cover individual homeowners’ homes and personal belongings.
But, if you live in a condo association where certain elements are shared, your condo policy may cover select items, such as shared walls and balconies. Still, the interior of your condo and your personal items are your responsibility, which means you will still likely need to purchase a separate condo insurance policy.
How to Find the Best Homeowners Insurance Policy for You
It is clear that homeowners can benefit greatly from home insurance, especially considering how much financial protection it offers. But, it is ill-advised to simply go with the first option you see. Here is how you can find the best homeowners insurance for you.
1. Understand Your Needs
First and foremost, you should sit down and evaluate what you want in a homeowners insurance policy. Do you want comprehensive coverage or is the bare minimum enough? How much do you want as your policy limit? What is your budget per year? Answering these questions will help you set a matrix that you can use to assess offerings.
2. Shop Around for a Homeowner Insurance Company
There are plenty of homeowner insurance companies that provide varying policies. Make sure to inquire about each one of them so that you can get a grasp of what they have to offer.
It is equally important to understand their claims process. This way, you know how easy or difficult it is to file a claim with them. Look at online reviews or ask other homeowners for their recommendations, too.
3. Ask for a Homeowner Insurance Quote
Once you have a list of companies in mind, ask them to provide you with homeowners insurance quotes. This is how you can gain a deeper understanding of the details of each policy. This is also how you can compare policies against each other. Don’t be afraid to talk to an agent so they can explain everything to you in detail.
The Verdict: Do Homeowners Really Need Home Insurance?
The short answer is yes. While homeowners insurance is something you hope you will never have to use, it’s still worth having it around just in case. Without it, you are vulnerable to financial risks.
Elite Management Services helps homeowners associations with many aspects of HOA management, including advice on insurance. Call us today at (855) 238-8488 or contact us online to request a free proposal.
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