What’s the deal with homeowners insurance?
When purchasing a home, the term homeowners’ insurance comes up quite a bit. Although it’s an assumption that it’s a requirement, many new buyers don’t understand what homeowners insurance covers and why they truly need it. Let’s start with the basics:
- What is homeowners’ insurance?
This is a series of coverages that assist in repairing or replacing your home, belongings or both if damaged. In some cases, it also covers the cost of you damaging someone else’s property or if they are injured on yours.
- Is it a requirement?
If you will carry a mortgage when purchasing, most lenders require a homeowners’ insurance policy to protect their investment. Individuals who purchase outright may not have to purchase a policy, but they should be aware of state and local requirements.
- What does it cover?
A standard homeowners’ insurance policy covers the home, structures that reside on your property, personal property and liability. Your home, or the dwelling, means the actual structure, the roof, walls, and attached structures such as a garage, deck, and pool screen. Other structures that would be covered include a tool shed, fence or detached garage. They are located on your property but not directly attached to the main dwelling.
Coverage for your personal property varies. Most policies have thresholds on the amount of what they will replace whether the items are stolen, or damaged by fire or wind. If you have a number of valuables to protect, it is wise to have an extended coverage policy to ensure they will be covered. Liability protection comes in when you have someone not living with you is injured while on your property. Having bodily injury liability coverage may help pay for any legal expenses that may arise from medical bills incurred by someone who is at fault.
- Is flood insurance covered?
Flood insurance is a separate policy that may or may not be required. If the home being purchased is in a flood zone, the law requires that a flood insurance policy be added to the homeowners’ policy. Flood insurance covers essential systems in the home that deal with water. It also covers appliances; carpeting and window treatments; permanently installed paneling, wallboard, bookcases and cabinets; foundation walls, staircases and anchorage systems; detached garages; personal property; certain valuables up to $2,500 in value; other coverage such as groundwater seepage and mudslides. If a neighbor’s pool floods your home or a water main break occurs, your home should be covered. There are some items flood insurance does not cover, and there is a 30-day waiting period before the policy is activated.
Homeowners insurance costs vary based on the type of policy, location and additional coverages. It is always best to have a policy in place – even if it’s not required. For more information on homeowners’ insurance coverage and what would be best for you, contact the team at Dimmitt Insurance today.