If you are a home buyer facing buying your first house, you may have a lot of questions about where homeowner’s insurance fits into the process. Here are some basics about this critical type of insurance.
Homeowner’s insurance is a package policy, meaning it will cover both damage to property and liability or legal responsibility for any property damage or injuries that policyholders or their families cause to other people — including damage caused by pets.
Most damage caused by disasters is covered, but keep in mind that there are exceptions. Standard homeowner’s policies, for example, don’t cover flooding, earthquakes or poor home maintenance. You can get flood coverage from the federal government’s National Flood Insurance Program, and you can get this through your insurance agent. Earthquake coverage can be obtained through an endorsement or in a separate policy. Most maintenance-related problems are the responsibility of the homeowner.
A standard homeowner’s insurance policy includes four main types of coverage:
1. Structure of the Home
This will cover the cost to repair or rebuild the home if damaged or destroyed by fire, hail, hurricane, lightning or other disaster that has been outlined in the policy. It won’t cover damage caused by flood, routine wear and tear, or earthquake. Most standard policies will also cover unattached structures, such as garages, gazebos or tool sheds.
2. Personal Belongings
- Furniture, sports equipment, clothes, and other personal items will be covered in the event they are stolen or destroyed by fire, hurricane or other disaster. Most companies give you coverage for between 50 to 70 percent of the amount of insurance on the home’s structure, including off-premises coverage. So, your belongings are essentially covered anywhere in the world.
- Costly items like jewelry, silverware and furs are covered, but if they are stolen, dollar limits will apply. If you want to insure these items to their full value, it’s wise to purchase a personal property endorsement or floater so you can insure them for their appraised value.
3. Liability Protection
Liability provides coverage against lawsuits for bodily injury or property damage caused by policy holders or that family members cause to other people. It will also pay for damage caused by household pets. The cost of defending the policyholder in court and any court awards are both covered.
Liability limits start at the $100,000 range. You can also purchase an umbrella or excess liability policy for broader coverage, including claims for slander and libel.
4. Additional Living Expenses
This covers additional costs of living away from home if your house becomes inhabitable due to fire, storm or other insured disaster. It will cover hotel bills, meals out, and other living expenses you may incur while your home is being repaired or rebuilt.
Homeowner’s insurance is part and parcel of buying a home. You should speak with your real estate agent and insurance company to get more information on the right policy for you.
Contact Berkshire Hathaway Premier Properties
To learn more about homeowner’s insurance and how it fits into the home buying experience, just contact Berkshire Hathaway Premier Properties today at 832-626-4889.