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Homeowners Insurance

A home is the largest financial asset most individuals or couples ever own. When purchasing home insurance, make sure to cover the home in its entirety. Homeowners insurance might not cover exceptional valuables within the home such as jewelry, art, or collectibles, so it is important to ask an insurance agent about riders.

A rider is a kind of add-on to the basic home policy and offers extra benefits in exchange for an increased cost. Additional riders allow homeowners to modify or customize coverage above the level of selecting coverage or deductible levels.

The following frequently asked questions provide more basic information about homeowners insurance:

1. What is homeowner insurance?

Comprehensive homeowner insurance protects a home and the assets within it. The cost of homeowner’s insurance varies by location, but there are variables homeowners can control to reduce homeowner’s insurance premiums.

Before purchasing a homeowner’s insurance policy, homeowners should match coverage with anticipated needs. Most homeowner’s policies do not cover floods or hurricanes. It is important to purchase coverage for these events if homeowners live in a high-risk area.

2. Who is it for?

Owners of a mortgaged home are required to carry homeowner insurance by the mortgage lender. If the property holder owns the property outright and does not make mortgage payments, it is appropriate to protect the investment with an inexpensive homeowner policy.

3. How does it work?

A standard homeowner’s policy is based on the International Risk Management Institute’s Form HO-3. The policy is likely to offer protection from fire, theft, hail, wind, riots, sleet, aircraft, snow, vehicles, falling objects and smoke. Read the fine print to ensure that the home policy includes necessary coverage.

4. What are the different types of coverage in existence?

The two general types of home insurance are guaranteed replacement cost and actual cash value policies. Buy guaranteed replacement cost rather than an actual cash value policy. For instance, if the homeowner has guaranteed replacement cost coverage and the insured home was purchased at $125,000 but now costs $175,000 to rebuild, he or she would receive only $125,000 if actual cash value coverage is purchased. If the home is destroyed, purchasing less expensive homeowner insurance will cost $50,000.

5. What are the major benefits?

The loss of a home after a catastrophic event, lost personal items after a burglary, or a mysterious disappearance of a valuable item are the major benefits of homeowner insurance. Without homeowner insurance, it is possible to lose everything in a fire or tragic event.

Some policies even provide a reasonable level of liability insurance that covers events such as a slip and fall accident, a dog bite on the property, or risks associated with a home business.