A Beginners Guide to Homeowners Insurance
While buying your first home is exciting, buying your first homeowners insurance policy isn’t nearly as much fun. New homeowners have all kinds of questions about what homeowner’s insurance covers and what it doesn’t, and understandably so. When shopping around for a policy to protect the biggest financial investment of your life, you want to feel confident that you’ll walk away with enough coverage.
Fortunately, with just a bit of a debriefing on homeowner’s insurance, those shopping for their first policy can feel empowered and knowledgeable even before meeting with an insurance agent. Here’s a quick breakdown of the primary areas of homeowner’s insurance coverage, including how much you need to protect your home and belongings.
What is Covered?
When buying an insurance policy, it’s important to know what it’s going to do for you as far as offering protection for your home and belongings. Since a home is made up of much more than just four walls and a roof, homeowners insurance includes coverage for all related aspects — not just the building itself. Coverage also aims to protect a home’s contents, including the family and their guests, against potential disasters within or surrounding the house.
Standard homeowner’s insurance policies have four main coverage categories:
Damage to the Home’s Structure: The first category of property damage concerns the actual dwelling or the structure of the house itself. Your homeowner’s policy protects the home’s structure from damage or destruction due to covered perils, which we’ll explore further in the next section. Detached structures, such as sheds, are often covered as well.
Liability: Homeowners policies include liability coverage for both bodily injury and property damage to a third party. Coverage extends to all members of your family living in the home, including pets. Liability coverage protects you against legal claims by reimbursing you for attorney and court fees, including any settlements you’re ordered to pay if the case rules against you. Your homeowner’s policy even protects against incidents in which you are sued away from home.
Additional Living Expenses: If your home gets badly damaged or destroyed and you’re forced to live elsewhere while repairs are done, your insurance will reimburse you for the additional expenses such as hotel rooms, eating out, extra gas mileage, etc., within reason.
Damage to Your Personal Property: This second aspect of property damage covers your personal belongings (e.g., furniture, electronics, clothing, artwork, decorations, etc.) stored within the home or in places such as storage units, to an extent. Damage, destruction, or loss of your personal property due to a covered peril is all protected under your insurance policy.