20 Interesting things to know about home insurance

Home insurance is a critical component for protecting your most valuable asset—your home. Here are 20 interesting facts and insights about home insurance that can help you better understand its importance and functionality:

1. Replacement Cost vs. Actual Cash Value: Home insurance policies can be based on replacement cost (the cost to replace or rebuild your home) or actual cash value (replacement cost minus depreciation).

2. Dwelling Coverage: This is the part of your policy that covers the structure of your home. It should ideally be enough to completely rebuild your home at current prices.

3. Liability Protection: Homeowners insurance typically includes liability coverage, which protects you against lawsuits for injuries or damages that occur on your property.

4. Standard Exclusions: Common exclusions in home insurance policies include floods, earthquakes, and normal wear and tear. Additional coverage can be purchased separately.

5. Home Inventory: Keeping a detailed inventory of your belongings can make it easier to file a claim. Modern apps and cloud storage can simplify this process.

6. Loss of Use Coverage: If your home is damaged and uninhabitable after a covered peril, loss of use coverage can pay for temporary housing and living expenses.

7. Discounts Available: Many insurers offer discounts for things like security systems, smoke detectors, bundling policies, and being claim-free for a certain period.

8. Insurance for Older Homes: Specialized policies may be needed for older homes, especially if they include architectural elements that are expensive to replace.

9. Deductibles: A deductible is the amount you pay out of pocket before your insurance kicks in. Higher deductibles can lead to lower premiums.

10. Insurance Scores: Similar to credit scores, insurance scores are used by some insurers to determine risk and set premium rates.

11. Scheduled Personal Property: High-value items like jewelry, art, and collectibles may require additional coverage beyond standard personal property limits.

12. Percentage Deductibles: For certain risks, like hurricanes or hail, deductibles may be a percentage of the home’s insured value rather than a fixed dollar amount.

13. Mortgage Requirements: Most mortgage lenders require homeowners to carry insurance to protect the investment.

14. Flood Insurance: Typically, separate flood insurance is needed and can be purchased through the National Flood Insurance Program (NFIP).

15. Claims-Free Reward: Some insurers offer a discount or premium reduction for homeowners who have not filed a claim in a certain number of years.

16. Guest Medical Coverage: This provides coverage for medical expenses if a guest is injured on your property, regardless of liability.

17. Renewal Discounts: Long-term policyholders may receive discounts upon renewal as an incentive to remain with the same insurer.

18. Land Value Is Not Covered: Home insurance covers the house and belongings, not the land on which a house is built.

19. Credit Impact: While it’s more common with auto insurance, some states allow home insurers to consider credit when setting premiums.

20. Home Improvements: Significant renovations or additions can increase the replacement cost of your home, requiring an update to your insurance policy to reflect the increased value.

Understanding these aspects of home insurance can help you tailor your coverage to meet your needs, ensure adequate protection, and potentially save money on premiums.