Things you really should know about homeowners insurance

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Things you really should know about homeowners insurance
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When Eric Rosenberg bought his first home in his mid-20s, a condo in Denver, and was tasked with getting homeowners insurance, he didn’t find his lender being much help.


“My bank told me that I had to get homeowners insurance, but didn’t give me much guidance beyond that,” says the 33-year-old Rosenberg, who has now gone through the process three times, in three different states.


If you’re a new homeowner and are having trouble making heads or tails of homeowners' insurance, you’re not alone. In fact, according to a J.D. Power survey, only 48% of customers fully understand their policy.


To learn everything he could about homeowners' insurance policies, Rosenberg turned to his personal support network—and the internet—before making a decision.


“In every area, insurance rates tend to vary widely, says Rosenberg, who is the founder of Personal Profitability. “It’s 2018—use the internet!”


“There are some great options out there to find out everything you need and compare rates before you buy. Don’t listen to high-pressure agents or salespeople. Figure out what makes the most sense for you, then reach out to the insurance company.”


The more you know…


Taking the time to know what you’re buying is worth the investment. It really is a case of the more you know the better.


Doing your own research before you opt into a plan will not only help you understand what’s best for you but also help you get your head around what you can expect from your policy.


Overall satisfaction among homeowners who understand their policy is 92 points higher than those who don’t fully understand their coverage, according to the J.D. Power survey.


To help you understand homeowners insurance and find the policy that’s right for you, we’ve got all the basics right here:


What is homeowners insurance?


Homeowners insurance is a type of property insurance that covers private residences. It offers financial protection in case of an accident, theft or disaster involving your home.


A standard homeowners' insurance policy typically covers structural damage, personal belongings, liability, and additional living expenses.


1. Structural damage


This is one of the key differences between homeowners vs renters insurance. In the case that your home suffers damage from theft, vandalism, or is destroyed by disasters such as fire, windstorms, hail, lightning or explosions, homeowners insurance can cover the costs of repairing or rebuilding it.


Your mortgage lender might refer to this as hazard insurance, but don’t let that trip you up. It’s just part of your homeowners' policy.


Most policies also cover detached structures that are separate from your house, such as a garage or tool shed. These structures are generally covered up to a percentage of the insured value of your home’s physical structure, for example, ten percent.


2. Personal belongings


Personal belongings that are stolen, damaged, or destroyed by an included disaster on your policy are typically covered. These may include:


● clothing

● furniture

● appliances

● computers

● TVs

● home decor

● wine and spirits

● sporting goods

● children’s toys

● electronics


Your level of coverage for personal belongings will generally be a percentage of your home’s insured value. So if your home is insured up to $100,000, and personal belongings coverage amount was to be 50 percent of this, the limit would be $50,000. The actual percentage used will vary from policy to policy.


Your homeowners' insurance policy will also cover belongings that aren’t inside your home but included on your property: trees, shrubs, BBQ grills, and patio furniture and so forth.


High-value items, such as jewelry, furs, artwork, and antiques are usually covered in a standard policy. There are assigned dollar limits, so you’ll want to read the fine print.


3. Liability protection


Liability protection covers lawsuits against bodily injury or property damage that you, family members, or pets may cause to others. Such protection covers court costs and any awards you may have to pay in court.


Your policy also includes what’s called no-fault medical insurance. So if a visitor happens to be injured in your home, their medical bills can be paid by your insurance company.


4. Additional living expenses


Let’s say your home burns down and it’s now uninhabitable. While your home is being rebuilt, you’ll need to live elsewhere for a short while. Additional living expenses (ALE) cover any living away from home costs and eases the stress of being temporarily uprooted. These expenses may include lodging, meals at restaurants, storage fees, and other costs incurred while your home is being rebuilt.


And if you rent out part of your home, the amount you would’ve collected on rent while your home is being repaired would also be covered.