Protecting Your Biggest Investment

Homeowners insurance is required by mortgage lenders and can protect your investment from the unexpected. A policy can help pay for repair costs, replace your belongings and provide liability protection in case someone gets hurt on your property.

There are many things that impact your rates, including your home’s replacement cost, neighborhood crime rate and your claims history. To get the best coverage, you need to understand your homeowners insurance policy.

Coverage Options

There are different home insurance policies that you can choose from. The most common is the HO-3 policy that covers the structure of your home, personal property and liability. You can add endorsements to the policy that offer coverage for certain items like jewelry, art and collectibles. There are also options for loss of use coverage that reimburses you if you need to stay somewhere else because your home is not safe or functional, and a personal umbrella policy that provides additional liability insurance in case the limits on your other policies are reached.

When considering the different options, make sure that you have enough coverage to replace your home and its contents in the event of a total loss. Be careful not to file too many claims, as this can lead to higher premiums or cause your policy to be canceled. Some events that are typically excluded from homeowner’s insurance include flood, earthquakes, landslides and sinkholes.

Coverage Limits

The amount of protection you receive for your dwelling, personal property and liability is largely determined by the coverage limits in your policy. The amount of deductible you select is another important factor and a decision that should be made carefully with consideration to your financial situation.

Your dwelling coverage pays to repair or rebuild your home if it is damaged by fire, severe weather or other covered perils. Your policy may also include coverage for detached garages, sheds and other structures on your property.

Your personal property coverage typically defaults to a percentage of your dwelling coverage limit and can be increased to cover higher value items like jewelry, art or valuable collections. You can also add additional protection to your personal property with valuable policy add-ons like inflation guard coverage or extended replacement cost coverage.

Coverage Exclusions

Homeowners insurance provides financial protection against certain risks and perils — but there are certain things a policy will not cover. These are called exclusions.

Typical exclusions include earth movements (quakes, tsunamis), catastrophic events (earthquake or flood) and war or nuclear hazards. Additionally, a policy may exclude damage to your house or property from owner neglect or purposeful actions. These situations typically require a separate coverage rider to provide protection for these types of losses.

Most standard homeowners policies either provide replacement cost or actual cash value coverage for the dwelling and personal property in your home. To help you decide which option is best for your situation, we encourage you to discuss all of your options with a licensed home insurance agent. We can also explore additional optional coverages like personal liability and medical payments to pay for injuries on or off your property. These can be added to a primary homeowners policy or to an endorsement to the personal property coverage in your policy.

Policy Documents

When it comes to protecting your home, it’s important to take the time to shop around for homeowners insurance. It’s not a luxury; it’s a necessity. Mortgage companies typically require it and will not approve a loan or financing without proof of coverage. It also protects you from financial ruin if your home is damaged or destroyed by an unexpected disaster.

It’s vital to understand the differences between replacement cost value and actual cash value, and policy exclusions. These are details that you can find on your policy’s declarations page and policy jacket.

In addition to finding out about deductibles, coverage options and premiums, you should ask about customer satisfaction. You can find this information in annual reports, online reviews and word-of-mouth recommendations from friends and family members. This is the best way to ensure you’re choosing a company that will stand by its promises after you file a claim. For example, a company that has high retention rates shows that customers are satisfied with its claims service.