Homeowner insurance, popularly known as property insurance, is a type of insurance that covers any loss or damage to your private home. If under any unwanted circumstances, your home is destroyed partially or completely or if there is a burglary takes place, the insurance provides beholds the liability to incur for the losses you come across concerning the repair or replacement of a destroyed portion of your home or even rebuild of your property if required.
When it comes to verifying the coverage and the limits, it is utmost essential to check and confirm before purchasing what all the insurance covers. However, under standard criteria, homeowner insurance includes the following four types of coverage:
• Coverage for the Home Structure: This provides for the cost of repair or rebuilds of your home if in case the destruction caused is due to some selected natural disasters like hurricane, lighting, fire, and hail.
• Coverage for Personal Belongings: This incurs the cost of stolen personal belongings like furniture, jewellery, sports equipment, silver utensils, and similar items available in your home. If these items are destroyed by unwanted situations like hail, lighting, and fire, then also the insurance company is liable to pay for the losses. However, the coverage has certain restrictions and limitations that vary from one service provider to another.
• Liability Protection: This covers the liability for property damage or physical injury caused by the policyholder or any of the family members who unwittingly cause harm to others.
• Additional Expenses: If in case your home is destroyed and unfit for living due to any natural disaster like fire or storm then the service provider is liable to pay for the additional living expenses away from your home. This includes the cost of your hotel bills, food expenses and various other necessary living expenses while your house is being rebuilt.
Now, when you are aware of the types of coverage, you should learn about the three different levels of coverage, which marks an essential aspect of the homeowner insurance policy. The necessary three levels include the following:
• Actual Cash Value: This level is the first level where the cost of the policy covers the total depreciated value of your house plus the value of your belongings.
• Guaranteed Replacement Value: This level of coverage includes the total amount required for repair or rebuild of your home irrespective of the actual worth of your property and of the limit set under your policy guidelines. This level is one of the most appropriate levels of policy coverage as it absorbs any change or deviation regarding increased replacement costs in the ever-fluctuating property market.
• Replacement Cost: This level covers the repair or rebuilds cost within the actual value or the original value without any kind of deduction for depreciation.
Now, when you have known all the types and levels of coverage, you ought to see how the insurance actually works.
The process is simple with filing a claim in case of any loss due to fire, storm, or burglary. The executive from the company verifies your application, and the adjuster will evaluate various factors to assess the damage and then finalise on the compensation part. However, the compensation or the received cost of insurance depends on the following factors:
• The pre-defined limits that are set on your policy
• The level of coverage you have purchased actual, replacement or guaranteed
• The deductible amount that you have paid before the coverage
To conclude, having homeowner insurance is essential or else you have imposed to free your pockets and spend in hundreds and thousands for repairing or rebuilding the structure of your property in the case for any unpredictable circumstances. Having insurance also helps in the case of a mortgage. Under such a scenario, your property can destroy due to specific factors, but the mortgage loans continue, and you are liable to pay that. Here, the policy helps you cover the losses of the destroyed property while you set yourself free to pay just the loan amount without worrying about the property. Set yourself free from the financial burden of having a property but with a well-researched and well-thought homeowner insurance policy.