It’s probably safe to say that your home is one of the most—if not the most—valuable of all your assets. It, therefore, makes a lot of sense for you to do what you can to protect it, and the best possible protection you can get is home insurance.
A home insurance policy is designed to provide homeowners the protection they need from damage and losses that disasters may inflict on their home and their belongings.
Is getting home insurance a requirement?
Home insurance is completely optional, particularly when you paid for your home in cash, or has been handed down to you free of any obligations.
However, if your home is under a mortgage, then you will likely be required by your lender to purchase homeowners insurance. After all, your lender has a stake in your home until the mortgage is fully paid and would want to make sure that any damage sustained by your home during disasters will have coverage.
Standard home insurance coverage
A standard insurance policy usually covers partial or total damages to the structure of your home as well as outdoor structures like garages and sheds sustained during disasters that include fire, hail, hurricane, and lightning.
For some reason, homeowners insurance policies do not cover damage from floods and earthquakes. If your home is located in an area prone to flooding and earthquakes, it would be wise to purchase separate insurance policies that cover damages and losses caused by such disasters.
Damage to or loss of appliances, furniture, clothes, or any of your belongings during a disaster have coverage in a standard home insurance policy as well.
Home insurance also provides you compensation for temporary living expenses, which may come up when the damage your home sustains during a disaster is so severe it’s rendered inhabitable.
Another type of protection that a home insurance policy provides is one against liability from personal injury or property damage that you, your family, or even your pet inflicts on a third party within the confines of your property.
How home insurance reimbursement works
No homeowner ever wishes for the day to come when they would make a claim on their home insurance. However, when that day does arrive, your insurance provider will compensate you for any damage to the structure of your home or the loss of your belongings as long as it’s covered under your policy.
At present, there are three ways your insurance company can reimburse you.
Cash value coverage—If your home insurance policy is a bit on the affordable side, then this will probably be the way your insurance company will reimburse you when you make a claim. Remember that affordable policies also come with the smallest payout. To reimburse you via cash value coverage, the insurance company will issue a payment to cover the cost of replacement and will make a deduction for appreciation.
Replacement cost coverage—Unlike cash value coverage, policies with replacement cost coverage will not deduct appreciation when replacing your damaged or lost items. Keep in mind, however, your policy limits will dictate actual coverage, so if your costs breach those limits, you could still paying for replacement with your own money.
Guaranteed or extended coverage—If your home insurance policy has this type of coverage, then the insurance provider will reimburse the cost of replacing your damaged or lost belongings, even if that cost is higher than the coverage limit set in the policy. This is typically the most comprehensive and costly type of payout.
These are just some of the most basic things you need to know about home insurance. Always remember that we at Seely & Durland Insurance are here to serve you and can help find you the right coverages that fit your individual needs. Contact us at 845-988-1177 or send us an email today! We are your business, home, auto, and life insurance solutions provider, partner, and adviser, serving Warwick, Greenwood Lake, Florida, Goshen, Pine Island, Middletown, Chester, Monroe, Newburgh, Orange County, and the Hudson Valley and Tri-State Area.
This article is provided by Bennett and Porter Wealth Management.