WHY DO I NEED HOME INSURANCE?
Regardless of whether you are buying a new home or have paid off your mortgage , you may have wondered the importance of home insurance. Do you really need it?
The United States Census Bureau mentions that in 2015 the median price of a new home was approximately $300,000 –
which means that your home is one of your most valuable assets, or perhaps the most valuable. Homeowners insurance helps protect that investment – and you – in many ways.
These are some of the most essential reasons why it is important to consider homeowners insurance.
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HOME INSURANCE MAY BE MANDATORY
In some cases, a homeowner may be required to have home insurance.
If you have a mortgage, your lender will most likely require you to purchase homeowners insurance, says the Insurance Information Institute (III)*.
Typically, before financing or refinancing your mortgage, the mortgage company will ask you to prove that your home is adequately insured.
This is because the lender wants to ensure that their investment in your home is protected in case it is damaged or destroyed in a fire or any other risk.
A local agent can help you get home insurance that fits your needs.
If you don’t have a homeowners policy, the Consumer Financial Protection Agency * notes that your lender is allowed to purchase insurance and charge you the cost.
Keep in mind, however, that the policy the lender buys may be more expensive and offer more limited coverage than what you can buy yourself.
HOME INSURANCE PROTECTS MORE THAN YOUR HOME
While a standard homeowners policy helps protect your home, its coverage typically extends beyond the physical structure of your home.
From your personal belongings to the shed in your backyard, or even medical bills if a guest is injured on your property, a home insurance policy can include coverage for:
Your home
If your home and attached structures, like a deck or garage, are damaged by a covered peril, homeowners coverage can help pay for repairs.
Other structures
Other structures coverage on your policy can help pay for repairs or replacement for separate structures on your property, like a fence or shed, if they’re damaged or destroyed by a covered peril.
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Personal property
This coverage can help pay to replace certain belongings, including furniture and electronics stolen or damaged by a covered loss.
You and your family
If you or a family member is found legally responsible for accidentally damaging someone else’s property or injuring someone, liability coverage can help pay for costs related to repairs, legal fees and medical bills.
Guests
If a visitor is accidentally injured in your home, your guest medical protection policy can help pay for the resulting medical bills.
Additional living expenses*. If you can’t stay in your home after a fire or other claim, your homeowners insurance coverage can help pay for temporary increases in living costs, like hotel bills.
HOME INSURANCE LIMITS AND DEDUCTIBLES
It is important to note that all coverages have limits, the maximum amount your policy will pay after a covered loss.
When selecting your coverage limits , be sure to consider things like the potential cost of rebuilding your home or replacing your belongings in the event they are damaged or destroyed by fire or a covered loss.
Also remember that many coverages have deductibles . Your deductible is the amount you’ll pay before your insurance benefits kick in to help compensate you for a covered claim.
Having a home insurance policy won’t prevent damage to your home and belongings, but it can help provide financial security if the unexpected happens.
If you have a homeowners insurance policy, you can be better prepared whether it’s a storm or a crisis – knowing that your homeowners insurance can help you cover the costs of damage and move on.
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WHAT IS COVERAGE FOR OTHER STRUCTURES IN A HOME INSURANCE POLICY?
Other structures coverage is the part of a homeowners insurance policy that helps pay to repair or replace structures other than your home, like a fence, if it’s damaged by a covered peril.
For example, if a tree falls on your garage , coverage from other structures may help pay for repairs.
Here are some things to keep in mind about coverage for other structures.
WHAT OTHER STRUCTURES DOES HOME INSURANCE COVER?
Items on your property that are typically covered for other structures are:
- A fence
- A detached garage
- A pool
- A kiosk
Other structures on your property are generally covered for the same perils as your home.
So if your home coverage includes risks like theft, fire, falling objects, and vandalism, your fence is likely covered. Read your policy to find out what perils it covers.
HOW MUCH COVERAGE DO I HAVE FOR OTHER STRUCTURES?
Coverage for other structures may be based on a percentage of your home coverage, says the Insurance Information Institute.
So, for example, if you have $300,000 in homeowners coverage, which applies to your home and attached structures;
you can have up to $30,000 in coverage for your fence and other non-fixed structures on your property.
If you are making improvements to your property, such as adding a kiosk, you may need to review the coverage limits of other structures;
to ensure you have the necessary protection to pay for the repair or replacement of non-fixed structures after a covered loss.
Your agent can help you adjust your coverage limits.
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OTHER CONSIDERATIONS
You may be sure you have enough protection for your fence or detached garage, but what about the stuff you store inside?
The personal property coverage in a homeowners insurance policy generally helps protect your belongings regardless of where you keep them;
so you’ll likely have coverage for items you store in a detached garage, for example. You can usually adjust your personal belongings coverage limits based on your particular needs.
A local agent can help you review your existing coverage to determine if it makes sense for you to make any changes to your policy.
