If you’re a new homeowner and are having trouble making heads or tails of homeowners insurance, you’re not alone. Home InsurancePurchasing home insurance can be daunting when you consider all the different pieces of the puzzle in evaluating policies and coverage.

However, beyond the usual factors that most people consider when purchasing a home insurance policy (cost and coverage), there are a number of other issues that can really make a difference. Not all insurance policies and not all insurance companies are the same. 

As a consumer of home insurance, you may have wondered about the factors involved in how the product is priced and whether or not it’s a reasonable cost. Many factors are involved in the home insurance process, and it may surprise you that insurance companies don’t always make a tremendous profit from the business.

As an individual consumer, it may seem that you pay a lot for each year’s insurance and do not always make a claim, thereby not getting your money’s worth. However, when you have a better understanding of all that goes into the home insurance business, you might better appreciate the risk your insurance company takes on your behalf and the value proposition of home insurance.

FIRST: Make Sure You Adhere to the 80% Rule for Home Coverage

The 80% rule refers to the fact that most insurance companies will not fully cover the cost of damage to a house due to the occurrence of an insured event (e.g., fire or flood) unless the homeowner has purchased insurance coverage equal to at least 80% of the house’s total replacement value. In the event a homeowner has purchased an amount of coverage less than the minimum 80%, the insurance company will only reimburse the homeowner a proportionate amount of the required minimum coverage that should have been purchased. Full Article HERE

Homeowners Insurance, Explained

Enough Home Owners InsuranceYour guide to understanding the basics of insuring a home

Once you find your new home, you must start thinking about homeowners insurance – mandatory for taking out a mortgage and highly advisable considering your home is likely one of the biggest financial investments you’ll make in your lifetime.

Thing is, few homeowners do extensive research about the differences between homeowners insurance policies, let alone take the time to read the fine print.

In fact, a mouth-dropping 52% of policyholders don’t have a full grasp on insurance coverage. We’re talking things like what’s covered (and what’s not) and how much homeowners insurance they really need.

That’s why we’re here to pull back the curtain and explain in plain, transparent language the ins and outs of homeowners insurance.

What is homeowners insurance?

A homeowners insurance policy is a contract between you and your insurance company that covers you in a bunch of different situations. Homeowners insurance coverage protects you and your home if bad luck leaves you recovering or repairing the damage. Still not sure you got it? This homeowners explanation will make things crystal clear.

What does homeowners insurance cover?

Here’s a closer look at what’s covered by your basic HO3 (homeowners) policy:

1. Your house, or in insurance lingo, Dwelling

Referred to as “Dwelling Coverage,” this protects you from damages to your place (your home and everything attached to it, such as a garage, chimney, in-ground pool, etc.)

2. Other structures on your property

Things like your driveway, fences, sheds, and other structures that live on your property are also covered by homeowners insurance.

3. Your personal property

Generally speaking, personal property refers to the stuff you own. Fun fact: Your household insurance has your back whether your stuff is at home, or anywhere else. So say your computer gets stolen from your car, or your shed burns down with a bunch of power tools inside – you’ll be covered. Take note: there may be sub-limits on certain valuable things like jewelry and artwork: make sure to schedule personal property like this when buying your policy.

4. Additional living expenses

Say one of those pesky perils happens and your place becomes uninhabitable due to one of the situations we described above. What then? Well, this situation is covered under something called “loss of use,” and your insurance company may help pay for a temporary place to stay and basic living expenses such as food, laundry, parking, etc.

5. Personal liability

Liability refers to things you’re responsible for. In the insurance arena, this means if for some reason you’re someone getting injured on your property and it’s your fault, or you/anyone named on your policy causes damage to someone else’s property or stuff, your insurance company should have you covered. Just to be 100% clear: we’re only talking about unintentional situations. Read more

The dwelling coverage in a homeowners insurance policy generally protects the insured house itself. As with other insurance coverages, dwelling coverage is typically subject to limits — and some homeowners select dwelling coverage limits that are lower than they should be. Here’s why some homeowners end up underinsuring their houses, and how you can make sure your house is fully protected in the event of a covered disaster.

How Much Homeowner’s Insurance Do I Need?

What’s one of the biggest—and worst—risks you can take when buying homeowner’s insurance?

Not buying enough.

If a wildfire devours your home and you’re forced to rebuild, wouldn’t it be awful to discover you don’t have enough homeowner’s insurance to cover costs? You don’t need us to tell you the answer is yes! Unfortunately, three out of every five Americans could face that exact situation because they don’t have a clue they’re underinsured—some by 20%.( 1)  It’s crucial to have the right amount of coverage for your home. And we’re here to help you do just that.

Basically, you want enough homeowner’s insurance to:

Rebuild your home (extended dwelling coverage)

Replace your stuff (personal property)

Cover injuries and damages that happen on your property (liability)

Reimburse your living expenses after the loss of an insured home (additional living expenses)

1. How Much Dwelling Coverage Should You Have?
First, you want to buy the right amount of homeowner’s insurance for, well, your home.

Dwelling coverage promises to rebuild your home if it burns down, crumbles in a windstorm, or explodes without warning. When you hear dwelling coverage, think the structure of your house, all the materials used to build it, and anything attached to it, like a garage, deck or front porch.

Find expert agents to help you buy your home.

How much do you need?

This one’s a no-brainer: Your dwelling coverage should equal the replacement cost of your house, which is the amount of money it would take to build a replica of your home.

You should definitely have replacement cost coverage for your home.

How do you calculate the replacement cost?

Calculating the replacement cost can be tricky. To be sure you have a good estimate, use the next three steps to calculate the closest estimate.

First, take the square footage of your home and multiply it by local construction costs. You can find these costs on most construction companies’ websites, or you can ask your independent insurance agent to look up those costs for you.

Next, use an online calculator to get a second estimate. There are free online calculators that use your home’s square footage, building materials and umber of rooms to give you a good replacement cost estimate.

Third, once you have your own estimate, ask a professional to give you theirs. An expert independent insurance agent, like one of our Endorsed Local Providers, will know the local area and can help you calculate a very close estimate of the replacement cost. Read more here

Lots of homeowners have questions about what their insurance actually covers but unfortunately many don’t find the answers until they have damage from a fire or natural disaster. One of the easiest ways to determine what is and isn’t covered is to look at the Declaration Page of your policy, which is basically a miniature summary of your coverage.

Protecting Your Home: Understanding Your Home Insurance Policy

As a homeowner, one of the most important aspects of your home isn’t something you use daily. And it isn’t something flashy you show off to friends. It’s your homeowner’s insurance policy, and it protects you in more ways than you may think, helping you rebuild your home or repair damage that results from a covered loss.

But, that’s not all. It can also help cover the costs of a lawsuit, help you pay for somewhere else to live when your home is uninhabitable and much more.

Home insurance is typically very comprehensive, but all policies have exclusions and coverage limits. It’s vital to know what those are so you know what’s covered and what’s not. Fire damage? Typically covered. Flood damage? Typically not.

With this guide, you can begin to understand what a typical home insurance policy covers. Just keep in mind that coverage varies from carrier to carrier, region to region and even policy to policy. Only your individual home policy can tell you the coverage you have and that which you don’t. For an even better understanding of your home policy coverage, review it with your local independent agent.

What Home Insurance Covers The typical homeowner’s insurance policy has six types of coverage. They are commonly known as:

Coverage A: Dwelling, for damage to your house that occurs due to covered losses, such as a fire. Following a covered loss, dwelling coverage helps you repair or rebuild your home, including the structures, such as a garage or a deck, attached to it.

Coverage B: Other Structures, for damage to other buildings or structures on your property that result from a covered loss, such as a tornado. This may include a detached garage, a barn or a fence.

Coverage C: Personal Property, for damage to or loss, including theft, of your personal belongings and possessions, such as jewelry, furniture, guns, and other valuables. If you experience a covered loss, this coverage will help you replace items up to the defined dollar limit in your policy. In certain instances, your belongings may be worth more than the typical home insurance policy covers. In this case, you may be able to purchase additional coverage through a process known as “scheduling valuables.” To help expedite a personal property claim, it helps to keep an updated home inventory of your belongings.  Click here to read the full article here

Do you have the right amount of homeowner’s insurance?

When it comes to your biggest investment—your home—you can’t afford to be underinsured. That’s why choosing the right independent insurance agent is so important. An insurance agent will help you choose the exact coverage you need—from dwelling to personal property all the way to liability and additional living expenses.

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