After joining the highly sought-after list of American homeowners, the next big step is to shop for home insurance. This is an added expense to your homeownership, so you cannot afford to rush through the process or make haphazard decisions. To ensure you're making the right decisions, here are four important questions to ask when purchasing home insurance.
Why Do You Need Home Insurance?
Your house is probably your most valuable investment. If a disaster strikes, you want to know you can cover the losses without draining your bank account or accumulating debts. Home insurance ensures that any damage to your home or its contents is covered at all times.
Besides, it may be a requirement by your mortgage lender. That's because the lender is like a joint homeowner with you during the entire mortgage period, and they will want to be sure the joint asset is protected.
What Kind of Home Insurance Do You Need?
There are multiple factors to consider regarding the kind of home insurance you need. But for starters, you'll probably need an insurance policy that covers the following.
Your House: Home insurance can help rebuild or repair your house if a covered event destroys it. This may also include the structures on your property like the storage shed, gazebo, detached garage, or guest house.
Your Home's Contents: A disaster may destroy not only your home, but also the contents inside it. Home insurance can cover the cost of replacing your possessions.
Legal Bills: You could be held liable for injuries sustained by a guest while they are on your property. Thankfully, your home insurance can help pay for the related medical bills and legal costs.
Additional Living Expenses: Assuming your home is ravaged by a fire, you'd probably need a temporary place to stay, like a hotel or lodging, as your home is being rebuilt. Home insurance may include additional living expenses coverage to cater for your hotel bills and other expenses.
Will Your Standard Homeowners Insurance Policy Cover Damage Caused by Floods and Earthquakes?
Unfortunately, floods and earthquakes may not be covered by a standard homeowners' insurance policy. But if you live in an area that experiences these disasters frequently, you can purchase a separate insurance policy for additional protection.
Similarly, if you own precious items whose value exceeds the limits in your home insurance policy, like fine jewelry or an art collection, you can purchase Personal Articles Floater (PAF) coverage for those items.
Is It Okay to Just Have Basic Home Insurance Coverage?
There's nothing wrong with just having basic home insurance coverage. But think about how much it would take to rebuild your house if it was destroyed. Or how much you would need to replace your possessions if they were stolen.
With just basic coverage, you will probably end up spending money from your pockets to rebuild your home or replace your stuff. Therefore, if you can afford it, take enough home insurance coverage to cover possible losses fully.
For more information on home insurance, contact a company near you.