Your house is your safe heaven and a place where you enjoy with your family and friends, and make beautiful memories. Additionally, this is one is the most significant investment you will ever make; and that’s why it’s essential to cover your property.
Nearly 90% of homeowners have some type of insurance, according to the Insurance Information Institute. However, this leaves millions of people unprotected, who risk a financial loss in case of natural disaster, or human mistake.
Here are some of the key reasons why it’s important to consider a homeowner’s insurance.
Hazard insurance protects your home against unintentional damage, or destruction of property caused by fire, theft, storm, and others. But, when you are insured, the company will cover the damage, or replace the things you’ve lost.
For instance, maybe your five-year-old $1,000 television, won’t be worth that exact amount because the insurance depreciates value with age, but at least you will be getting some compensation. Therefore, it might be a good idea to insure your home, as well as things inside because you will be covered at all level.
Mortgage companies demand that homeowners get mortgage insurance. When you take out a mortgage, the lender considers your property as collateral. In that case, you are required to buy a minimum level of hazard insurance.
However, this doesn’t stop you from purchasing a higher amount than the minimum if you think it’s necessary.
Homeowner insurance will cover the majority of your property, but there are certain limits to what the insurer will pay for certain things. For example, if you keep cash or jewelry inside your home, the insurance won’t cover the loss.
Also, if you have a personal business or home office, hazard insurance doesn’t include the equipment. You might want to consider getting a supplemental policy to protect your assets in case of damage.
You should keep in mind that insurance doesn’t protect you against everything. The companies may exclude earthquake or flood damage from the coverage and offer you separate policies. Pay attention to law exclusion in your policy because it can be quite pricey.
For example, if an older property is damaged more than 50%, then it will have to be rebuilt to current standards. In this case, the law exclusion means that the insurer isn’t obligated to pay upgrading costs such as roofing, wiring, and so on.
Covering only property might pose an issue for some homeowners. But, some policies may also protect you against lawsuit due to an injury on your property. For example, maybe your neighbor’s child decides to play in your pool and gets injured when accidentally slip on the deck.
In this case, you will be held responsible. Therefore, it would be wise to get liability insurance as part of your homeowner’s policy. It will cover potential medical costs, lost wages, and legal fees. Additionally, this insurance helps you increase your property value, in case you decide to list it one day.