This Is What You Need to Know About Home Insurance
Your home may be your most valuable asset, more than just a roof over your head. However, if disaster strikes, you might not be able to afford to replace or repair the damage caused. Thus, protecting your home with the right insurance coverage is very important.
Homeowners insurance will compensate you if an event covered under the policy destroys or damages your personal items or home. If you cause property damage or injure someone else, it will also cover you in certain situations. The 3 main functions of homeowners insurance are to:
- Replace or repair your personal belongings
- Repair your yard, house, and other structures
- Cover personal liability if you’re legally held responsible for injury or damage to anyone else
While homeowners insurance coverage isn’t mandatory according to the law, if you have a mortgage, your lender may need you to insure the home to protect its investment. Home insurance is almost always a wise purchase even if you don’t have a mortgage, giving you both liability and property coverage.
Typically, standard homeowners insurance provides 6 types of coverage:
Dwelling: Covers damage to the house and its attached structures like a porch, etc. Usually, this coverage amount that is provided is sufficient to rebuild your home.
Other structures: Covers sheds, fences, and other stand-alone structures on your property. The typical coverage amount is 10% of your dwelling coverage.
Personal property: Pays to replace or repair belongings that are damaged or stolen in a covered event. The coverage amount lies between 50% to 70% of the dwelling coverage.
Additional living expenses: Helps in paying temporary living expenses when the house is being repaired. This amount is 20% of the dwelling coverage.
Liability: Pays if you cause property damage or injure someone through neglect or unintentionally. Generally, the coverage amount for liability lies between $100,000 to $500,000.
Medical payments: Pays to treat anyone who is injured on your property, irrespective of who’s at fault. Also pays if a pet or family member injures someone elsewhere. This coverage amount lies between $1,000 to $5,000.