What Do You Need to Know About Buying a Homeowners’ Insurance Policy?

What Do You Need to Know About Buying a Homeowners’ Insurance Policy?

A homeowners’ insurance policy provides financial protection when your home and belongings are damaged/lost by theft, vandalism, and natural disasters. It also provides liability coverage for third-party injuries. However, knowing what type of policy and how much coverage you need is essential. Read on to find out.

Types of Home Insurance Policies Available to Choose From

Basic Form

It covers your home and personal belongings (at their actual cash value) against ten named perils, including falling objects, fire/lightning, theft, aircraft, vandalism, vehicles, windstorm/hail, smoke, explosion, and riot/civil commotion.

Broad Form

It covers your home structure (at its replacement cost value) and personal property (at its actual cash value) against ten perils in basic policy and six additional perils, such as:

  • Volcanic eruption

  • Weight of ice, sleet, or snow

  • Freezing

  • Accidental discharge/overflow of stream or water

  • Sudden and accidental tearing apart, burning, cracking, or bulging of a built-in appliance like a water heater, centralized air conditioner, or heating system

Special Form

It covers your personal property against perils in basic and broad policies. It provides liability coverage, loss of use coverage, and all-risks coverage for your home (covered for everything except for the perils excluded in your policy).

Contents Broad Form or Renters Insurance

It excludes dwelling coverage and covers your personal property (at its replacement cost) inside and outside your rental property against perils in basic and broad policies. It also provides liability and additional living expenses coverage.

Comprehensive Form

It covers your dwelling and personal property at their replacement cost. It provides all-risks coverage for your home and personal belongings and high coverage limits for expensive items (jewelry, fine art, etc.).

Unit-Owners Form (Condo Insurance)

It covers personal property, third-party medical bills, additional living expenses, and personal liability.

Mobile Home Form

It covers park model homes and RVs, sectional homes, trailers, modular homes, single/double-wide mobile homes, fifth-wheel trailers, etc.

Modified Coverage Form

A basic policy covers older homes (at their actual cash value) that are susceptible to damage/loss from outdated plumbing, a damaged roof, or perils.

Related Article:

Determining What Type of Homeowners’ Insurance Do You Need?

How Much Is Home Insurance Coverage Required?

It depends on the amount you need to pay:

  • Rebuild Your Home (Dwelling and Other Structures)

    Determine the coverage amount depending on the local construction costs, square footage of the structure, home design, and special features.

  • Enough to Cover Replacing Your Stuff (Personal Property)

    Conduct an inventory of personal possessions and take stock of expensive items to determine whether or not the basic coverage (50-70% of your dwelling coverage) is enough.

  • Cover Injuries and Damages Occur in Your Property (Liability)

    The minimum liability coverage limit is $100,000, but homeowners are recommended to purchase $300,000 to $500,000 worth of liability coverage.

  • Reimburse Your Additional Living Expenses (Loss of Use)

    Though you must have 20% of your dwelling coverage limit, you can calculate the amount based on how much you spend on food, rent, and transportation.

A home insurance policy with sufficient coverage will always protect your home and belongings. Contact our agents at Aimpro today to find the right home insurance policy according to your needs and budget.

Related Article:

Will My Home Insurance Cover Damages to My Belongings While Moving?

Author: Aimpro Insurance
Aimpro Insurance will offer the best coverage from only the most reputable carriers. Our clients have come to depend on us to provide advice and customized programs to meet all of their insurance needs. The overall experience for our clients is “Insurance made simple.