Home Insurance: An Overview

Home insurance is the insurance that can be used to cover the costs of repairing the damage to the house and anything contained within it. it is an important aspect of home ownership, since most homeowners can't afford to cover those expenses out of their own pocket. Different insurance companies offer a variety of home insurance policies, each with it's own benefits and drawbacks. Homeowners should aim to obtain a policy that fits their needs without putting undue strain on their finances.

Understanding Home Insurance

Home Insurance can be divided into two parts - property protection and liability protection. The former focuses on repairing physical damage while the later focuses on costs related to other people and their property. Homeowners should make sure both parts are included in their policy.

Property Protection

Under property protection, insurance policies offer different types of coverage - some general and frequently avaiable, some more niche options designed for more specific situations.

  • Dwelling Coverage – Covers the house itself and the attached structures, as well as built-in appliances, plumbing, heating, built-in air conditioning systems and electrical wiring.
  • Other Structures Coverage – Covers detached structures such as garages and storage sheds, as well as fences, driveways and sidewalks. It should be noted that unattached structures that are used for business purposes are not covered by home insurance.
  • Personal Property Coverage – Covers personal belongings of anyone who resides in an insured home (guests don’t count). Most home insurance providers will not cover motorized vehicles. The providers may also limit coverage of firearms, artwork, business property, electronic data, jewelry and money that is physically stored inside the house. A good policy would cover damage caused by household pets.
  • Loss of Use Coverage – Covers living expenses for policyholders who can’t live in their homes while they are being repaired. This only applies if their living expenses exceed what they would normally spend at their homes.
The more niche coverage or the additional coverage is much more varied. It can deal with anything from removal of damaged trees to protection against inflation. To see which insurance company covers what, check the companies' official websites.

Liability Protection

Liability protection covers the cost personal injuries and property damaged that happened in the policyholder's house to someone who wasn't the homeowner or a member of his or her immediate family. It can be divided into two aspects:
  • Personal Liability - covers the costs resulted from any lawsuits that resulted from bodily harm and damage to personal property. This does not cover auto and business-related incidents.
  • Medical Payments - covers medical expenses for any guest who was injured on the homeowner's property, regardless of who is at fault. This does no any activities related to the policyholder's home business.
Conditions That Affect Insurance Rates

There are many factors that affect home insurance rates. Most of them have to do with the property itself. In many cases, there isn't much homeowners can do to affect them.
  • Location - if the house is easily accessable and close to emergency service builings such as a police station, a fire station or a hospital, the insurance rates will be lower. The rates can also be affected by the neighborhood income levels, crime rates and vacancy rates.
  • Constructuction - a house built of non-flammable materials with earn lower rates than the houses made out of flammable materials such as wood.
  • Occupancy - the less families live in a house, the lower the rates will be.
  • Claims History - the less previous claims the house has, the cheaper the insurance rates will be. It doesn't matter who made the claims or under what circumstances.
  • Safety - if the home has safety features such as smoke detectors, window locks and burglar alarms, the rates will go down.
Getting the Best Deal

Regardless of how much the home insurance policy costs, there are a few things homeowners  can do to make it even cheaper.
  • Finding discounts – Most insurance companies offer a variety of discounts. Broadly speaking, there is a discount for just about anything policyholders do in order to protect their homes and their health. For example, policyholders that install a security system or get a better lock may be eligible for discounts. The same goes for policyholders who, for example, abstain from smoking cigarettes and maintaining clean driving records. Different companies offer different discounts, and policyholders should check them carefully to find as many applicable discounts as they can.
  • Dumping the unnecessary coverage – If policyholders don’t need certain types of coverage, there is no reason why they should take it out. For example, if they don’t have any freestanding structures on their property, there is no reason why they should get other structures coverage. That said, they should carefully consider the benefits of each type of coverage before deciding not to get it. When in doubt, it is usually best to get it – it will save money on the long run.

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