Homeowners insurance offers coverage to repair or rebuild your home after damage or theft. Every homeowner’s insurance policy is unique. It is important to understand what to look for in a homeowners insurance policy and the different types of coverage. By learning more, you can make an informed decision about what coverages you need and what policy options work best for protecting your home.
What Does Homeowners Insurance Typically Cover?
A standard homeowners insurance policy covers most parts of your home and personal property. This includes the repair or replacement cost of damaged or stolen items, temporary living expenses if you are forced to leave your home during repairs and medical payments. The six main types of coverages include:
- Other structures
- Personal property
- Additional living expenses
- Medical payments
While these six coverages are fairly standard, not all policies include them. There are additional coverages that can be added as well, depending on the homeowner’s specific needs, such as high-value home insurance coverage.
Factors To Consider When Choosing Your Policy
Understanding the main factors that play a role in the quality of your coverage is important. The four main factors to consider when choosing your homeowners insurance policy is the extent of the coverage, the cost of the deductible, the cost of the premium and whether the policy covers replacement cost or provides actual cash value. By learning these basics, you can make a more informed decision. Be sure to also inquire about additional coverages you may benefit from as well to add to your policy.
The Extent Of The Coverage
The extent Of the coverage is laid out in the level of coverage (see below). An HO-3 homeowners insurance policy covers most applicable perils. There are 16 policies in particular that are included in the HO-3 policy. Among the most notable perils include:
- Fire or lightning
- Water overflow
- Damage by vehicle
An HO-1 or HO-2 policy is more preferable for those who desire lower premiums and do not need extensive coverage. The level of coverage is very telling as to the extent of the coverage you will receive, but it is important to inquire about the specific details and what perils are included and what may be excluded in your proposed policy.
The deductible cost determines how much you must pay out of pocket to access your insurance coverage. You can choose a policy with a lower deductible, but this likely means higher premiums. On the other hand, a higher deductible likely means you pay less each month in insurance premiums.
The Cost Of The Premium
The insurance premium is the regular price you pay for your homeowner’s insurance. Most policies have a monthly premium, although an annual premium may be available as well. As discussed, lower premiums likely mean either less coverage or higher deductible costs.
Replacement Cost Vs. Actual Cash Value
One of the most important questions to ask about your policy is whether or not it provides replacement cost or actual cash value. With replacement cost coverage, the provider covers the cost to replace your damaged or lost property at its replacement value. It does not factor in the depreciation of the property.
With actual cash value, the homeowner receives compensation to repair or replace the current value of the property. This does factor in depreciation primarily based on the age of the property that is being replaced, and of course, the benefits and drawbacks to each. Replacement cost pays out more if you need to make a claim for damaged or lost property, whereas actual cash value insurance coverage often comes with lower monthly premiums.
Reviewing The Different Types Of Coverage
Perhaps the most important part of homeowners insurance is the level of coverage. You can avoid paying more than necessary by choosing the right level of coverage. The most common types of coverages include:
An HO-3 is perhaps the most common. This includes coverage for most perils. A peril is simply a way in which damage may occur to your home. While looking closer at the details of your policy is important, the type of coverage you have should tell you a lot about the benefits you receive.
Speak With An Insurance Professional For More Tips On What To Look For In Homeowners Insurance
If you are searching for Homeowners insurance, then reach out to Merchant Family Agency today. Our insurance professionals in Marietta, Georgia can provide you with all of the information you need to decide which coverage options are right for you. Here at Merchant Family Agency, we value honesty, and we can tailor your policy to fit your budget and insurance needs in the best way possible. So why wait? Get the process started today by contacting us.