Home Insurance

What is Home Insurance and What Are the Advantages of Home Insurance?

A home insurance is an important tool in protecting your personal assets. It insures you against liability that can result from property damage, theft or loss of life. Your home insurance is also a legally binding contract of that insurance company’s promise to cover for these losses outlined in your coverage given that you pay periodic premiums to the insurer. Your home insurance helps you to lessen the financial burden related to unforeseen disasters such as fires, explosions, and property vandalism.

There are two basic types of home insurance: actual cash value and assessed value. With actual cash value coverage, your insurer pays the insured’s damages only if the insured is actually able to collect on these losses. With this type, the insured is not protected from any losses due to events beyond his control such as natural disasters and tragedies. With this type of coverage, you have to be sure that there are no errors in computing for these damages since they may go unclaimed in certain cases. Accidental losses and similar events are not covered by this type.

The second type is the additional living expenses coverage which involves payment for your own living expenses, if you are the primary holder of the house and you live in it. In general, you will be covered for two primary living expenses per year. The first expense is your actual housing cost plus the balance of your additional living expenses. This second expense is the sum of your dwelling expenses plus your homeowners insurance contribution up to the limit per year.

You should decide the extent of your coverage in accordance with the facts and circumstances of your life. You should check with your homeowners insurance agent to determine the right amount of coverage based on your lifestyle and needs. Additional living expenses coverage will be available to you only if your homeowners insurance offers such coverage and it is higher than your homeowners insurance premium. Usually, homeowners insurance premiums are based on the risk level of the insured and not on the lifestyle choices or character traits. If your lifestyle changes as a result to changing jobs, you may need to change your coverage to reflect these changes.

Your homeowners insurance is not an all-inclusive coverage. There are exclusions and limitations of coverage provided by different companies and depending on the company itself. There may be additional policies which you have taken out at different times. You can check with your homeowners insurance agent about these additional policies which may be included within the coverage. Make sure that the company may pay you a claim even though your claim has been denied by your previous homeowners insurance company.

There are policies which are available to you which specifically cover damages due to natural disasters. Insurance companies which specialize in such coverage usually have experts who will help pay for the repairs of your property. In such a case, the coverage provided will be much more than that for regular homeowners insurance. Another example of this type of coverage is when your home is destroyed due to a nuclear explosion or a flood. With the help of your insurer, funds will be made available to help pay for the repair of your home.

The personal liability coverage limits provided by most insurance companies will vary. The personal liability limits will protect you from claims being filed against you after your home has been damaged. For instance, water damage caused to the roof of your house or walls of your house is covered by home insurance. However, if a fire has broken out in your house, the personal liability limit may be high. Claims made will be higher as compared to the claims made if the damage had been caused by an earthquake or a hurricane.

Since there are different types of insurances, you should know what the various kinds of coverage are and why they are being offered to you. When shopping for insurance, you should check the different policies offered by different companies and see what each policy covers. If you are purchasing insurance from a company offering limited coverage, you may need to obtain additional coverage beyond what is offered under the limited coverage policy. When shopping online for insurance, you should find out from the customer service representative what the policies may include and whether you may need to purchase extra coverage.

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