Whether you call it home insurance or homeowners insurance, it is not a luxury; it is a necessity. It protects your property from damage and theft, but what is home insurance, and why is it so important?

What Does a Homeowner’s Policy Provide?

A home insurance policy covers repairs or the replacement of your home and its contents following damage caused by fire, smoke, water, theft, vandalism, or other events listed in the policy. Homeowners insurance can also cover individuals injured on your property.

What is Covered in a Standard Policy?

Dwelling and Personal Property Coverage: This will cover damages to the interior and exterior of your home in the event of fire, smoke, hail, vandalism, theft, or any other covered disaster. The insurer will cover the costs to rebuild or replace what was damaged. Clothing, furniture, appliances, and jewelry will also be covered. Keep in mind there may be a limit on the amount they will reimburse you. According to the Insurance Information Institute, most insurance companies will provide coverage for 50% to 70% of the amount of insurance you have on the structure of your home.

Personal Liability: Liability coverage protects you if someone is injured on your property. If you are sued, this can cover legal fees and expenses. If someone is hurt, it can cover medical costs. This clause can include injuries caused by pets.

Living Expense Coverage: If you find yourself displaced due to repairs, this coverage will reimburse you for rent and cover the cost of a hotel room and restaurant meals while waiting for your home to be habitable again.

What Isn’t Covered?

Typically, flood and earthquake damages are offered as separate policies that can be added. Depending on where you live and the location of your home, you might be required to purchase this additional coverage. If you are still determining coverage, FEMA publishes a flood map where you can determine your flood risk.

Types of Coverage:

Actual Cash Value: Covers the cost of the house and the belongings inside but factors in depreciation when calculating reimbursement amounts.

Replacement Cost: Covers the actual cash value of your home and possessions without the deductions for depreciation. This allows you to repair or rebuild your home up to the original value.

Guaranteed or Extended Replacement Cost: This coverage is the most comprehensive and covers the cost to rebuild or repair your home beyond your policy limit. Typically, 20% to 25% over the limit.

How to Cut Costs on Coverage:

Buying a home is an investment. When looking at which insurance company to choose, be sure to evaluate the discounts that are offered. Look for multiple policy discounts, first-time homebuyer discounts, and new customer discounts. There are often additional discounts offered for equipping your home with a security system, smoke alarms and CO detectors, and weatherproofing.

Bottom Line

We recommend investing time in researching what home insurance is best for you. Most mortgage companies require borrowers to have insurance coverage for the total value of the property, or they won’t make a loan or offer finance options without it. Even if you are interested in renting, most landlords require their renters to maintain renter’s insurance.

LRG's agents can help and guide you through your home necessities. Contact us at 210-879-8220 or message us on our website if you need help. You can also follow us or message us on Instagram and Facebook!