What to know about homeowners insurance

Homeowners insurance is much more than just a luxury. In most cases it can often be a requirement. No matter which way you look at it, home insurance protects one of our largest investments. Knowing more about insurance that protects such a big asset can come in handy. In this article we go over some basic information you may want to know when looking for your next homeowners insurance policy.

Is homeowners insurance a requirement?

The first question on your mind may be whether or not homeowners insurance is a requirement. A key point to remember is all states will have different rules you must live by and every home insurance company will have their own guidelines as well. Typically if you have a mortgage on your home and a mortgage lender is involved, the lender more than likely will require you carry adequate home insurance according to your agreement. 

If your home is free and clear and you don’t have a mortgage on your home, in most states it is not a requirement that you carry homeowners insurance. Please keep in mind this will make you personally liable for anything that happens on your property. Due to reasons like these it may be a wise idea to have some sort of home insurance coverage, just for the extra peace of mind. 

Home insurance basics

When it comes to homeowners insurance there are several different coverage types, but there are a few main categories included in most policies. Damage to the exterior or interior of the home, personal belongings, personal liability, and additional living expenses. 

Exterior and interior damage to the home

If the home is damaged in a fire, lightening, vandalism, or a different covered peril your insurance company may rebuild or repair any damages to your home. Certain situations are not covered and may need additional coverage to be included. Floods and earthquakes are typically covered under a separate rider specific to those sorts of damages. 

Earthquake insurance

Earthquake insurance covers you in the event of an earthquake. A typical homeowners insurance policy will not cover earthquakes. If you live in an area where earthquakes may be frequent, this may be an insurance you should look into. 

Flood insurance

Your standard home insurance policy will not cover you in the event of a flood caused by a natural disaster. If a pipe were to burst unexpectedly in the home, creating flooding, you may be covered under your standard home insurance policy. Flooding due to excess rain or a storm will need to be covered under a flood insurance policy. 

Personal liability home insurance

Personal liability insurance is one of the other major elements of home insurance. Personal liability covers you if someone is hurt or injured in your home. It can also cover your legal fees if your dog were to bite a neighbor. It might even cover medical fees for the injured party as well. If this same situation lands you in court there’s a good chance it will pay for your legal fees too. 

Additional living expenses coverage

Additional living expenses covers you if you are forced from your home due to damages and incur additional living expenses because of it. For example you may need to pay for hotel fees and additional cost to eat due to always having to eat out. If you have a tenant and they can’t pay rent because they can not live in the home, you may be covered for your loss. 

Personal belongings

This coverage will protect your belongings in the home. We always suggest making an inventory of your assets. You should speak with an agent about coverage amounts as well. You have a lot of valuables, make sure you carry an adequate amount of home insurance. 

Three levels of coverage

Homeowners insurance policies have 3 different levels of coverage. Some cover you in greater detail than others. We go over the 3 basic levels below. 

– Actual cash value

Actual cash value covers the cost of the home. It will also cover the value of your belongings. This usually comes after deducting the depreciation of the items. 

– Replacement cost

Replacement policies cover the actual cash value of the house & your belongings without the deduction for depreciation. Basically this will allow you to rebuild your home up to the original value. 

– Guaranteed replacement cost

This may be the most comprehensive, it’s an inflation proof policy that will pay whatever the cost may be to rebuild or repair the home. This is even if it exceeds the policies limits. 

Wrapping up, this is a basic list for you to get started with. If you have additional questions regarding home insurance and live in California, please give us a call! Our agents are experts when it comes to home insurance and they are really nice people! Call us today 916 313 6100