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Congratulations! You are about to become a perfect homeowner. Before you let the drawn-out home buying process pass you by and you start enjoying the first moments of home ownership, make sure you are on top of the home insurance process.
After investing so much time, effort and money into purchasing your new home, you want to make sure that your home has the proper coverage it needs.
Of course, you probably aren’t even sure what type of individual coverage you need.
While there is standard insurance for homes, each home and each homeowner has individual risks that need to be addressed. And while insurance can seem like a thorny process, it’s easier to understand if viewed as piecemeal coverage.
Insurers sum up the six main forms of coverage so that even a layman can understand the information.
Six Essential Forms of Homeowners Insurance
1. Your Home Coverage: This coverage protects you against damage to the actual premises of your home. Losses caused by events such as fire, storm, theft and/or vandalism – if any covered loss – will be reimbursed to you to the extent of repairs or reconstruction. To assess your coverage needs in this regard, you and your insurance specialist can estimate how much it will cost to rebuild your home. Additionally, if the home has a mortgage, your lender will ask for specific types of coverage, as well as specified limits and deductibles.
2. Your other structures: Any detached garage or similar, such as a shed or fence, would be protected under this type of coverage. Coverage is usually up to 10% of the amount insured on your home, but you can request comprehensive coverage if you feel you need it.
3. Your personal property: This aspect of insurance protects you against loss or damage to your personal belongings. This includes furniture, sporting goods, computer systems, kitchen appliances, etc. A standard policy will cover the actual cash value, but you can opt for it if you feel it is better to go with replacement cost coverage. Both these forms of coverage are subject to prescribed limits and deductibles within the policy.
4. Coverage for loss of your use: If your home is so damaged by a covered peril that you can no longer live in it while it is repaired or rebuilt, this type of coverage pays the cost of your temporary living .
5. Personal Liability: This coverage will protect you from lawsuits if you or other household members injure someone else or damage someone else’s property.
6. Medical Payments: This type of coverage will cover the medical costs of those injured on your premises.
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