Home insurance is not a luxury by any means. It’s something you should get because it protects your home as well as your possessions against theft and damage. If you bought your home on a mortgage, your lender would require you to have a comprehensive home insurance plan. But whether it’s required or not, it’s a good idea to purchase this kind of coverage. Here are some of the basics of home insurance.
What Do Home Insurance Plans Cover?
Property Damage
In case of damages due to hurricanes, lightning, fire, vandalism, or any other covered disaster, your home insurance company will compensate you financially so you’re able to rebuild or repair your home. Keep in mind that clothing, appliances, furniture, and most assets inside your home are also covered if they happen to get destroyed due to a covered loss.
Personal Liability
Liability insurance protects you from lawsuits that others may file. This protection also extends to your pet. So, if your pet dog bites someone, your insurance company will pay their medical expenses. If a house guest trips and falls in your home and decides to sue you, your policy will cover all the associated legal expenses, as well.
Alternate Accommodation Charges
If your home is being rebuilt or renovated after being struck by a covered disaster and you need another place to stay temporarily, your insurance company will reimburse you for the expenses. This, however, does not mean you can check in to the nearest luxury hotel. Policies will likely have limits, and you’ll need to find a place that’s within those daily limits if you don’t want to pay out of pocket.
Types of Coverage
Actual Cash Value
A policy that covers the actual cash value of your home will essentially pay you the cost of the home, including the value of the contents within the property, after deducting depreciation.
Replacement Cost
Replacement cost policies cover the actual cash value without accounting for depreciation.
Guaranteed Replacement Value
This type of policy is the most comprehensive and is typically inflation-proof. These policies will pay you how much ever you need to rebuild your home, even if it’s over the limits of the policy.
