Home insurance covers your home and the things you keep in it. Home insurance provides financial protection against specific disasters, as well as other events and incidents identified in your policy.
Your insurance provider will pay for any loss or damage to your home and belongings in the event of said disasters. It is your responsibility as a homeowner and policy holder to know the details of your policy coverage.
You should know what is covered and what is not to avoid misunderstandings when filing your claims. That way, you can plan better for the repair or upgrade of your home in case it sustained damage because of a storm or if your pipes burst, for example.
Offhand, you will already have a fairly good idea of what and how much to expect from the insurance company as payment for the damage or loss to your property.
What does it cover?
Home insurance, also called homeowners insurance, is defined as a type of property insurance that covers private homes. Coverage includes damage to your property, as well as liability or legal responsibility for any injury or damage to property that you (or your family members) cause others.
The extent of your home insurance coverage depends on the type of home insurance policy you purchased. Damages due to most perils are covered with a few exceptions that are duly indicated in your policy.
Most insurance policies provide protection against the following: damage from smoke, frozen pipes, ice, and snow; fire and lightning; storm damage; theft; and vandalism.
Insurance against earthquakes and floods are bought separately depending on your particular location. For instance, say you're residing in California. California is widely known to often experience earthquakes yet this risk is not automatically covered in a standard home insurance. You have to buy a separate policy to insure your home against damages that may be caused by earthquake.
Similarly, if you live in Florida, you will need a separate flood insurance policy to protect you against flooding if there is a possibility of your home getting inundated by water.
Note that damages due to poor maintenance and normal wear and tear are not covered by your home insurance. As a homeowner, you retain responsibility to properly maintain your home.
Building insurance and contents
Although a typical home insurance covers both your building structure and contents, the terms and amount of coverage differ. Take a look at the following differences:
1. Contents insurance – covers the movable objects you keep in your home including your appliances, furniture, clothing, jewelry, books, art collection, and food in your freezer (sometimes). You can collect payment from the insurance company if any of your personal possessions get lost or damaged due to any of the hazards covered in your home policy.
2. Building insurance – protects your house and any other structure on your property.
Some points to remember about your policy
If you have been paying the same amount of premium on the same homeowners insurance plan for several years, it is highly possible that your policy coverage has changed in response to the latest economic developments.
Thus, it is a good idea to talk with your agent or insurance broker at least once a year, preferably before the renewal of your policy. It will be the perfect opportunity to assess the sufficiency of your coverage over your building and contents.
In the same manner, you should also update your insurance provider in case you made major changes in your home such as a kitchen remodel or addition of extra room. Don't forget to tell your agent or insurance broker that you just bought a plasma TV, which you'd also want covered in your policy.
It always pays to know the details of what your home insurance covers. This will prepare you when you have to arrange for the repair or replacement of your items or any part of your home that had been damaged or lost because of disaster.
