Purchasing a property is a significant investment that you can only protect with homeowners insurance. In case there is a theft, a natural disaster or even when an accident happens inside your home, this policy will cover you. Since several insurance companies offer different coverage, most people wonder what does home insurance cover. In this article, we will explain everything you need to know.
The first thing you should understand is that purchasing homeowners insurance is not an option. Even though having coverage is not mandatory under the law, most lenders will not approve your mortgage unless you have proper coverage. This means having homeowners protection is an unavoidable cost.
You need to understand several things before buying homeowners insurance, such as how much it costs and how would you be reimbursed. But before we explain all this, we will break down the policy to help you understand what is included.
What does homeowners insurance cover?
When you purchase homeowners insurance, you are getting different types of coverage in one policy. That’s why many people ask, what does my home insurance cover? The short answer is, it will protect three main things: the structure of your property, all your belongings and any liability due to an injury inside your home. To help you understand each coverage we will explain them below. If you’re looking for top-quality home insurance in Alberta, head over to Surex.
1. Dwelling coverage
This is the part of the policy that will protect the structure of your home. In case there is a fire or hurricane, the insurance company will reimburse you for the repairs of your roof, walls, floors, cabinetry, plumbing, among others. Remember that this protection has a limit, and some natural disasters such as earthquakes or floods are not included. That’s why you need to ask your provider what homeowners insurance covers.
Dwelling coverage can also protect any structure attached to your home, like a garage or deck. If you have a detached guest house, garage or shed, most policies will protect these structures as well.
2. Personal belongings
Apart from protecting the structure of your home, your policy can also cover everything inside it. Things such as electronics, plants, clothing, silverware and furniture are included in your homeowner’s insurance. However, if you have high-value items such as jewelry, firearms or musical instruments, you might need to purchase add-ons to protect them.
The amount of money you would be reimbursed depends on the total value of your personal belongings. To ensure you have enough coverage for your property, you will need to do an inventory of everything inside your house. If possible include photos and receipts on your report. We know this seems like a long task, but several apps can help you keep track of everything.
The best part about personal belongings protection is that it doesn’t matter where you are. For instance, if your cellphone or luggage is stolen from the hotel while you are on vacation, homeowners insurance will cover it. Also, if guests are staying in your home and their property gets damaged, your policy will reimburse them.
3. Additional living expenses
When people think about what does homeowners insurance cover? Most of them don’t realize the policy is also meant to protect the policyholder. For instance, imagine that there is a fire and your home is completely destroyed. Where are you going to live? How are you going to afford all your daily expenses? Homeowners’ insurance takes care of all that.
Once it is determined that you can’t stay in your house while it is being repaired, the insurance company will give you enough money to survive. This means it will cover hotel bills, grocery shopping, new clothes and even a rental car if you need it.
Depending on your provider, you might have a total limit of expenses. However, other companies don’t have a determined amount, but instead a limited time. To make sure which type of coverage you will receive, you need to read the policy beforehand.
4. Liability Coverage
The liability coverage of your policy is meant to protect your financial well-being when an unfortunate situation happens. Let’s picture you are having a party in your home, and one of your guests falls downstairs, or your dog bites somebody else’s children. Both of these situations could leave you in the middle of a nightmare scenario. But, if you have homeowners insurance, there is nothing to worry about because it will cover all legal fees and medical expenses.
You have the option to choose a liability coverage between $100,000 to $500,000. In case you want more protection, you can add personal umbrella insurance.
Now that we have answered the main question of the article: what does my home insurance cover? We are going to talk about your reimbursement options.
Homeowners policy: Reimbursement options
Almost every policy that you can find in the market will offer all the coverage mentioned above. But, the amount you pay will mainly depend on the reimbursement option you choose. In this regard, there are two types of settlement you can pick.
1. Actual Cash Value
As you might know by now, every time you buy something, whether it is a car or an article of clothing, once it is in your hands it starts depreciating. If you choose an actual cash value reimbursement, the insurance will give you back the value of the items at the moment. This means you won’t get the original amount.
2. Replacement cost
The majority of homeowners choose this option because it ensures you get enough money to buy new items. With this settlement option, the depreciated value of your property won’t matter, because you will get a check to purchase everything you need to rebuild your home.
How much does homeowners insurance cost?
The average cost of homeowners insurance is $1,211 but remember the price of the policy depends on many factors. Things such as your type of property, the age of the structure and the number of people in your home, could affect the cost of your insurance. That’s why before purchasing a policy, you should ask for different quotes and check you are getting all the basic coverage.