Learning The Basics Of Home Owner's Insurance
If you are buying a home, you will need to know exactly how home insurance works
. It can be a little confusing, but once you know the basics and the ins and outs, you will get the hang of it.A basic homeowner's insurance policy protects the owner against any property damage that results from things like fire, lightning, wind or hail storms. It will also provide for motel and food costs if you are forced to leave your home while such damages are repaired.
A typical policy, however, does not cover flood or earthquake damage. Because these issues are usually specific to certain regions of the country and can cause extreme damage, these can be purchased as separate policies.
If you live in a flood zone or near an earthquake fault line you may be required by your mortgage company to carry these protections. A basic policy will also cover homeowners against loss from theft or vandalism as well as reimbursement for personal property destroyed in natural disasters.
It will also provide for something that many people may not normally associate with home protection - liability coverage for lawsuits brought against the owner by people who were injured on the property. This includes the cost of legal defense up to the allowed policy limit.
Additionally, most policies will have a provision that will cover the basic medical expenses for the parties. Homeowners insurance is almost universally required by mortgage companies with the purchase of a home.
This is because the investment is almost as big for them as it is for you. They want to make sure the property is protected from major damages so that if you are ever unable to keep up with your payments, the lender can then reclaim ownership and be able to sell it fairly easily.
And even if you own your home outright, a good policy is still the best way to protect the value of your home in the face of the unexpected. This exists because a home is a huge investment, often one of the largest purchases many people make in their lifetimes.
Naturally, people want to protect the value of their precious property. Homeowners insurance is a contract between a homeowner and a company.
As long as the owner pays the required premiums and meets the other policy requirements, the insurance company guarantees to reimburse the owner for any losses incurred due to natural disasters or human-caused damage. The price of your premium is partially determined by things like the amount of the homes' square footage, age, and type of building materials used in the structure.
It is also important to note whether your home has been recently updated or renovated as well as if there have been any additions made to it. All of these aspects will help the company figure out how much it would cost to rebuild your house in case of a disaster.
The more expensive the rebuilding costs the more expensive your policy will be. The closer your home is to a fire hydrant and a local fire station, the more likely your home is to be saved should a fire occur.
This means less damage to repair and your insurance costs will be lower if you live close to these fire protecting features. If your home is in an area that is particularly prone to hurricanes or tornadoes, your homeowners insurance costs will be higher to account for this increased risk.
Remember that earthquake and flood protection are not included in a standard policy. If you need to purchase either of these, you will obviously have to pay higher insurance premiums.
Since part of a homeowners policy covers the cost of damage or loss of personal property due to theft or vandalism, the local crime rates will be factored into your premium price. A home located in a crime-ridden urban area will certainly mean higher costs than one situated in a quiet, suburban neighborhood.
There are many nice insurance features that are not necessarily included in a standard policy. These include things like guaranteed replacement cost coverage, inflation guard clauses, and building-to-code endorsements.
If you plan on adding any extras to your policy, you should expect to pay higher premiums. With this knowledge, you are more equipped to deal with your own home insurance in the future!
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