If you have recently bought a home, you deserve a round of applause. It’s hard work to earn your own house, and surviving the many weeks of uncertainty and the mountain of paperwork makes the rewards of a new home that much sweeter.
But now that you have your slice of the American dream, it’s crucial to protect it. There are many ways that misfortune can hit your home and your family, so you need to make sure that you can weather any unexpected events. That starts with obtaining homeowners insurance.
What is homeowners insurance, and how does it protect your home, your family, and your finances? We’ll detail everything you need to know with this quick homeowners insurance guide.
What Is Homeowners Insurance?
Homeowners insurance protects you from financial loss in the event of damage to your property or belongings.
The agreement works like any other insurance plan where you pay premiums on a yearly or monthly basis. In return, you receive assurance that if a covered incident occurs, such as a fire, your insurer will pay to replace the lost property and remedy the situation. When you make a claim, you pay a deductible and the insurance company pays the remainder.
What Does Homeowners Insurance Cover?
A standard homeowners insurance plan covers a wide array of scenarios that could put you at risk. Here are some of the typical areas of coverage:
- Dwelling coverage for your house
- Other structures coverage for detached structures such as garages or sheds
- Personal property coverage for personal belongings in the home
- Liability coverage for harm to a third party
After a covered event, the insurance company will step in to pay for several related expenses, such as replacement costs, medical expenses, or the cost of living in a hotel while repairs are done.
Structure and Property
Roughly 5% of homeowners make insurance claims each year. Of all claims, an astonishing 97% are due to property damage.
When a freak accident, extreme weather, or other unexpected event damage your property, your insurer will pay to rebuild the structure and replace damaged or destroyed belongings. Some incidents that a homeowners insurance plan typically covers include:
- Wind and hail
- Burst pipes
The property side of homeowners insurance manages anything that is outside the homeowner’s control. It won’t cover failure or damage that happens because of neglect, normal wear and tear, or intentional abuse. There are also many disaster-related events, such as earthquakes and floods, that do not show up on the standard policy.
Property has protection while it’s inside the home or on the property during the incident. For example, after a fire in the living room, your provider will cover repairs for structural damage as well as replacements for furniture, carpeting, electronics, and anything else of value.
Personal belongings often have coverage outside the home as well. For instance, if your laptop was stolen at a coffee shop, you could make a homeowners insurance claim.
In general, the coverage limits for off-site losses is lower than it is for losses on your property. It’s crucial to avoid undervaluing your possessions, so you need to be aware of coverage limits and exclusions. For treasured valuables, you can add extra coverage through a rider.
Liability claims are much less common than property claims, but they are no less crucial to prevent.
When someone who doesn’t live with you gets injured on your property, you will be responsible for damages. The same is true if you were at fault for damage to their personal property.
Insurance covers several steps of the remediation process when damage occurs. For example, if someone breaks their leg on your property, it would cover legal fees as well as medical and recovery bills. When a property gets damaged, your provider would pay for the item’s repair or replacement.
Typical liability coverage is between $100,000-$500,000. In general, there won’t be a deductible for liability claims.
One of the best homeowners insurance tips is to buy enough insurance to cover your assets. Should someone decide to sue over an injury, you could end up losing property and investment funds if your insurance is insufficient. Talk to your insurer about an umbrella policy if you need more liability coverage than basic homeowners insurance provides.
Do You Have to Get Homeowners Insurance?
Unlike auto insurance, no law makes homeowners insurance a requirement. But if you’re one of the many people with a mortgage, your lender likely demands that you have it while you pay on your house. Even if they don’t require it, it’s well worth the small investment to protect your home and everything in it.
How Much Does Homeowner’s Insurance Cost?
The average homeowner’s insurance premium is over $1,000 a year. Many variables can raise or lower your premium, including:
- Deductible amount
- Location of your home
- Home value
- Coverage limits
Insurance providers may take other risks into account, such as your credit history and whether or not you own pets.
The cost of insurance also increases if you get better replacement protection. If you choose actual cash value coverage, you get reimbursed for lost property based on its depreciated value. Upgrading to replacement cost will bring higher premiums, but you’ll receive more money to replace damaged property.
You can still get excellent rates even if you have a high home value or need low deductibles. By shopping around and discussing discounts, you can find several ways to save. Providers may offer special rates for bundling insurance with them or for upgrading your home’s security to reduce the risk of a claim.
Let Us Be Your Homeowners Insurance Guide
What is homeowners insurance? In short, it can be a life-changing difference when disaster strikes.
Accidents and the unexpected can happen to anyone no matter what measures you take. After putting in the time and effort to accomplish your goal of buying a home, you deserve the peace of mind that comes with quality coverage.
If you’re ready to find exceptional homeowners insurance in Chicago, let our team help you find the best coverage for your needs. From finding new plans to reviewing your existing policy, we can help you get the most for your money. Contact us today to learn more about getting incredible rates on your homeowners insurance.