Whether you’re a first-time homeowner looking to purchase home insurance, or you’re a long-time homeowner wondering why home insurance is important, we’ve outlined the basics and benefits of home insurance.
Provided Protection
Not all homeowners insurance is the same; however, almost all will insure you with compensation for damage done to the exterior and interior of your home. Homeowners insurance will typically cover damage done by fire, lightning and burglary. Since homeowners insurance does not cover flood or earthquake damage, you will need to add flood and earthquake insurance separately. If you have additional freestanding structures on your property, be sure that they are insured under the same policies and guidelines as the main house. Additionally, home insurance covers the following belongings: clothing, furniture, appliances and jewelry. If you have highly valued items, you may consider paying extra to ensure that these items are financially protected.
A Place to Stay
In the unexpected event that your home needs to be repaired or rebuilt, you want an insurance policy that provides you with a place to stay (hotel or lodging). This is called additional living expenses (ALE). ALE will help cover or reimburse you for rent or hotel costs. While there are daily limits and restrictions in place, insurance will also help with restaurant meals and other lodging-related costs that may come along while you wait for your home to be repaired.
Different Types of Insurance
While there are many different forms of homeowners insurance that offer varying levels of coverage, the four essential types include: actual cash value, replacement cost, extended replacement cost and guaranteed replacement cost. An actual cash value policy will reimburse you for your damaged home and items at the depreciated value of the item. This means that the price you paid for your home or items may not be the amount reimbursed by insurance.
A replacement cost policy is similar; however, it will cover the cost of your damaged items without deducting the depreciated cost. The reimbursement amount that you receive with a replacement cost policy will be closer to the paid price of your items. This allows you to rebuild or repair your belongings and home back to their actual value.
Thirdly, there is an extended replacement cost policy. With extended replacement, you will receive additional coverage. This additional amount is intended to help provide you with the means to afford extended dwelling or lodging costs if the repair of your home is taking longer than expected.
Lastly, there is the guaranteed replacement cost coverage. This type of homeowners insurance is thought to be the best, and for good reason. Guaranteed replacement covers everything that the previous three do. It also provides additional coverage in the event that labor or repair costs are higher than expected. Guaranteed replacement will provide you with an extra cushion of financial protection to pay for any repair cost.
No matter what you need, there is a homeowners insurance policy to protect your home and all the things you love.
If you are interested in home customization, call Paul Gray Homes at 316-990-0000 to speak to an expert.