It comes as no surprise that a house is one of the most valuable assets that a person can ever own. Also, it is an asset that you likely cannot afford to replace out of your pocket if a disaster strikes. This is why protecting your residential property with the right homeowner insurance coverage becomes highly crucial. But in case you aren't very aware of what homeowner insurance exactly is and what it covers, then you don't need to worry as we have got all that covered for you!
Meaning of Homeowners Insurance
Homeowners insurance is insurance that pays out of an event covered under your insurance policy that destroys or damages your home or its belongings. Apart from that, it will also cover the homeowners in certain circumstances where you injure someone else or cause damage to the property.
The top 4 functions of homeowners insurance in India involves the following:
1. Repair your home, yard and other structures
2. Replace or repair your personal belongings
3. Pay for you to live elsewhere while your house is being repaired
4. Cover personal liability in case you are held legally responsible for injury or damage to someone else
Now, the question arises- "Is a homeowners insurance policy really needed"? Well, homeowners insurance coverage is not required by law, but if you have a mortgage, your money lender will definitely require you to insure the house in order to protect its investment. Even if you are not holding a mortgage, purchasing home insurance is always a wise decision as it offers you property and liability coverage.
In short, a homeowners insurance policy is a financial safety that you might someday be glad to have!
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What Does Homeowners Insurance Cover?
The standard homeowner's insurance policy typically covers 6 kinds of coverage. Have a look!
1. Dwelling Coverage
The foremost and the most significant coverage under homeowners insurance is dwelling coverage. This coverage covers the structures of your house, involving walls, roof, windows and floors. Apart from this, built-in appliances like furnaces are also involved in the dwelling coverage. In case your house also boasts an attached garage, deck or porch, these will fall under the category of dwelling coverage too.
In most policies, the dwellings are covered for any cause of damage that is not specifically excluded. Some of the top causes of homeowners insurance claims involve hail, wind, fire, freezing etc.
2. Other Structures Coverage
As the name suggests, other structures' coverage type of homeowners insurance provides insurance for all the real estate structures that are not attached to your home. This can involve a fence, shed or detached garage.
In other words, most homeowners insurance policies also involve coverage for other structures on your real estate but separate from your house, like a detached garage, fence, or tool shed.
3. Personal Property Protection
Another coverage under homeowners insurance is personal property protection. Homeowners insurance does not just help you cover the damage to your house. It also offers coverage for the personal belongings that you keep within your home. Suppose a fire damages your furniture or your electronics are stolen from your house; Personal Property Protection might help you pay to replace or repair your belongings if a covered risk damages them.
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4. Liability Protection
Last but not least, a typical homeowners insurance policy offers liability coverage when someone not living with you is injured while on your property. For example, a visitor trips over your broken step. Bodily injury liability coverage might help you pay for your resulting legal expenses or the medical bills of the visitor, but only if you are found at fault. You can even increase your liability coverage limits by adding a personal umbrella policy. In this case, your insurance agent can explain to you better what options are available to you.
What Does Homeowners Insurance Not Cover?
There are basically many circumstances that homeowners insurance in India will not cover:
For beginners, coverage only applies to the categories stated: dwelling, other structures, personal property, personal liability and loss of use. Anything that falls outside these categories needs its own insurance like medical or auto insurance.
Secondly, insurance policies or coverages are meant for owner-occupied residences. In case, for example, you are a landlord, you will need landlord insurance, and your renter should consider getting a renters insurance policy in order to protect their belongings.
Thirdly, specific situations are excluded from a homeowners insurance policy. Some disasters or natural calamities like floods and earthquakes are universally excluded from home insurance policies. The rest will entirely depend upon the type of policy you opt for.
Things to Keep In Mind While Choosing Your Policy Coverage
Here's a listicle of 5 factors that every person must weigh while choosing the homeowner's insurance policy:
1. Always try to get coverage for at least 80% of the value of your home. Insurers will not reimburse you for the full amount of damages in case your coverage is less than that.
2. Property coverage has a limit per item, and that limit may not be enough for you to cover high-value objects. In case you have high-value items in your home like expensive furniture, or an expensive coin collection, you must consider enhanced personal property coverage to protect the full value of your personal belongings.
3. Your liability coverage amount must be roughly equal to your assets involving dwelling, personal property and wages. If someone is injured in your house, you will need enough coverage to pay for medical bills and legal costs.
4. You can take the benefit of policy bundling- you can often save on premiums by having two or more policies with the same insurance company.
5. There are multiple add-ons available for your policy, like swimming pool coverage or itemised property schedules for high-value items. Make sure to consider your professional and personal situations, your assets and your lifestyle and consult your insurance company to ensure you have the coverage that you need.
We hope this article has given you a complete understanding of "Homeowners Insurance Policy". Well, the homeowner's insurance coverage will depend upon the type of policy you get, the small print on what is and is not covered and how much coverage you choose. The most crucial part of the entire process is analysing your situation and working closely with a good insurance company to get the complete and most appropriate coverage possible.