HOME INSURANCE

Home insurance, or homeowner’s insurance or property insurance, is an insurance policy that covers damage to your home caused by incidences such as inclement weather and natural disasters, theft or vandalism, fire, flooding and other circumstances, depending on the types of coverage that you receive.

While home insurance typically only covers the structure itself and any other buildings on the property (i.e. sheds, gazebos, barns, garages), you can elect to add a “rider” to your home insurance policy that covers items such as jewelry, musical instruments, electronic equipment and other valuables. Note that most homeowner’s insurance policies do cover theft of personal belongings, but only up to a certain value. By including a “scheduled personal property endorsement,” or “personal property floater,” you can cover specific belongings in your home, such as fine art, engagement or wedding rings or collectibles.

Home insurers also typically recommend that you get personal liability coverage along with your home insurance coverage, though this is optional. Personal liability and medical payments insurance covers you in case someone is injured or otherwise damaged while on your premises. This includes contractors who may not carry their own insurance policies as well as visitors.

What isn’t covered by home insurance varies from provider to provider and from policy to policy, but typically, home insurance doesn’t cover any willful bodily injury or property damage caused by the owner to someone else on the premises, nor does it cover any damages incurred in relation to a business operated on the property. Home insurance also will not cover any watercraft or vehicles located on the property. Home insurance may also not cover sewer backups or drainage issues, unless you buy coverage separately. Flood insurance is also covered separately in most cases.

When damage occurs to your home, your home insurer will pay for repairs after you file a claim. In the case that your home is rendered completely uninhabitable (i.e. burns to the ground or is irrevocably water damaged), your home insurance provider will pay to have the home rebuilt from scratch. Note that you will only be covered up to a certain amount. That’s why they ask you to provide the rebuild value of your home when signing up for a policy. This amount is always much, much more than the price you pay for the home, since you’ll have to factor in the costs of building the home using today’s prices and today’s market. The cost of rebuilding your home from scratch will greatly impact the amount you pay in premiums each month.

You will be responsible to pay for a deductible, which is chosen at the time you sign up for your policy. So, for example, let’s say that you have a $1,000 deductible and you need to perform a $13,000 roof repair. You would pay $1,000, and the home insurance company would pay the remaining $12,000.

To determine the cost and terms of paying out your claim, the insurance company will send out an adjustor who will survey the damage. Oftentimes, the insurance company will require that you provide receipts and hire a licensed contractor to do the work. If you are able, you may do the repair yourself, although you the materials used and hours spent must be properly documents. Also be aware that if you do a shoddy job, you won’t be entitled to more money if there is another failure as a direct result of your poor workmanship.

As with most insurance, you’ll likely find the best deals by comparison shopping. Get quotes from several home insurance providers and compare what’s covered versus what you’ll pay. During your home insurance quote, they’ll ask you questions regarding the size and history of the home, as well as any other safety and security features. For example, a home with a sprinkler system, built-in anti-burglary system and up-to-date electrical wiring will have lower premiums, while a home that has older wiring, a wood-burning fireplace and a history of claims will fetch a higher premium. You can reduce your costs by opting out of optional riders and coverage or choosing a higher deductible. Also, be sure to ask about any discounts for members of any professional associations, societies or clubs, such as AARP, AAA or alumni associations.

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