Home Insurance Basics

We have all heard the saying “Be it ever so humble, there’s no place like home.” Our home is where we hang our hat and put up our feet. It is our retreat from the world around us. Our home provides us with shelter and comfort from the elements as well as from a long day out in the workplace. It is no wonder our home is generally the largest investment any of us will ever make.

Our home is important to us physically, emotionally, and financially. Therefore, it is important that you understand home insurance basics. You need to make sure you know exactly what is covered under your policy. Don’t wait until you need to file a claim to discover that you will be responsible for the entire cost of repairs and replacing items.

Home insurance is a policy purchased to protect your home and assets from disasters including fire, accidents, theft, and acts of nature. You pay a premium to the insurance company for the peace of mind that your home and contents will be protected from such losses. Most policies will only cover up to a certain amount, so make sure the dollar amount is sufficient to cover your investment. The higher amount of coverage you require, the higher your premium will be.

Home insurance policies vary by insurance company and state. However, they all have basic fundamentals in common. You will have a deductible, meaning a set amount that you will have to pay out of pocket each time you file a claim. The majority of home insurance policies cover the dwelling and attached structures, including a garage. If the garage is not attached, it is not covered. Ironically, your vehicle parked in that garage will not be covered under your home insurance policy. You would have to make a separate claim with your vehicle insurance.

Other home insurance policies will cover the expense of other lodging until your home can be lived in again. They will also cover the cost of the contents of your home up to a set dollar amount. It is very important that you document all home contents as well as the value. It is a good idea to purchase a home insurance policy that covers accidents on your property. If someone is injured at your home, the policy will cover their medical expenses.

Most additional structures on your property including barns and sheds are not covered under home insurance policies. If you keep valuable equipment in such storage areas, you will want a policy that specifically covers those areas. Most home insurance policies do not cover damages from war, pets, pollution, or basic wear and tear that takes place in every home. In addition, additional coverage must be purchased to protect against damages from natural disasters including earthquakes and floods.

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