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Homeowners Insurance

An Overview of Homeowners Insurance

The dream of home ownership is one shared by so many Americans. Those who have their own home can enjoy the many benefits that come along with it, including a sense of contentment and happiness. That being said, all the various risks, perils and financial trouble that also accompany it can turn the dream into a nightmare. Property damage can happen at any time and it can financially overwhelming to cope with. Purchasing a good homeowners insurance policy is arguably the best way to be prepared for all kinds of potential loss. If you have a mortgage on your home, the lender may likely require that you obtain some level of coverage for your home.

Types of Coverage

Every home insurance policy is different. Some will provide protection for all perils with the exception of some named exclusions outlined in the policy. For instance, a usual type of damage that will usually be left off a policy is damage due to an act of war. Other kinds of homeowners’ insurance will only provide coverage for specifically named perils. Common losses covered can be due to fire, theft, vandalism and storm damage. It is important to determine what kind of coverage you will need and to investigate if additional coverage to fill in any coverage gaps would be wise as well.

How it Works

A standard home insurance policy will normally offer personal property protection. This extra coverage compensates for any damaged or destroyed furniture, appliances and other belongings inside the home. You are given the choice to set your coverage limit by determining the estimated value of your home’s personal items. Many insurance companies mandate that the homeowner document his/her belongings prior to obtaining coverage and this can include the provision of photos proving ownership.
One can also determine his or her deductible amount, to a certain extent, and in general this means that the higher the deductible the lower your premiums can be. Some will simply elect to have a certain deductible amount, while others will determine a deductible amount that relates to a percentage of the total value of the home.

Big Benefits

While there is a myriad of options to consider when obtaining coverage, remember that a home loan provider may mandate certain minimum requirements for the policyholder. Before purchasing coverage, talk with your lender about their coverage requirements. You can always buy additional coverage in the future to reflect changes, such as the purchase of new personal property that is then added to the home.