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What Is Homeowners Insurance?
Homeowners insurance is the insurance type you want to purchase if you own or are buying your home. This coverage gives you financial protection against most disasters, and normally covers the home structure and the items you keep in it. This insurance protection is available as a package policy, because it may include a number of
coverage and components. Homeowners insurance gives you coverage against any damage to your home or property, and it also covers any liability for injuries or property damage that is caused by you or family members to other property and people. This policy may also include damage or injury caused by any pets which you own.
What Is Condominium Insurance?
Condominium insurance is a type of homeowners insurance for condominium owners. This coverage will come in two types, and both policies should be purchased to ensure complete coverage. When you own a condominium, you own a unit inside a bigger residential building or complex, with a number of other units as well. This means that you should have your own policy, to protect your unit and belongings, and a master policy which is purchased by the board of the condominium association. This policy will cover the areas which are commonly shared by all of the units and residents, and includes both damage and liability
coverage. Make sure you are aware of exactly what the master policy covers, so there are no gaps between this coverage and your personal insurance policy, or this could end up costing you a substantial amount of money.
What Is Apartment Insurance?
Apartment insurance is also known as renters insurance. This covers you if you rent but do not own your home, and this is a commonly overlooked type of insurance that should be purchased. Many renters do not realize the financial loss they may face if something goes wrong, and they become legally liable or end up losing property because of an event that should have been covered. This insurance coverage s usually very inexpensive, because the structure of the building is not normally covered. Many renters do not realize that their landlord's homeowners insurance does not cover tenant belongings. The liability portion covers the same things a homeowners liability policy will cover. Additional living expenses may also be covered, depending on the specific policy, if your apartment or rented home can not be lived in.
Coverage Normally Included In A Home, Condo, Or Apartment Insurance Policy
A typical standard homeowners, condominium, or apartment insurance policy without any extra additions will usually cover four types of situations. These are outlined below: -
Structural Coverage- This type of insurance coverage will protect you against financial losses if your home needs to be repaired or rebuilt. This covers damage caused by hurricane, hail, lightning, fire, and other disasters. The specific policy will state exactly which disasters and damages are covered and which are excluded. The coverage will not pay for damage caused by exclusions, which are listed and usually include flooding damage and earthquake damage, among others. Make sure that the amount of this coverage is enough to ensure you can rebuild to the same standard. If you have low coverage and your home is destroyed, it may be impossible to build a new one to those specifications. Usually structures that are not attached to your home are also covered under this section, and this includes any tool sheds, gazebos, garages, or other structures on your property. The normal advised coverage amount for these structures is around ten percent of your home coverage, but this can be adjusted according to your individual coverage needs. Renters or apartment insurance may not have to include this coverage type.
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Personal Belonging Coverage- This coverage will protect your belongings and household items in the event they are stolen or destroyed due to a covered event, such as a fire or hurricane. A typical policy will include coverage in an amount that is equivalent to between fifty and seventy five percent of the total coverage amount of your home, but this amount can be changed to meet your specific needs. A home inventory can help you determine what amount is accurate to cover the expense of replacing belongings that are gone. Most policies include coverage no matter where your property is, anywhere in the world, and not just when the property is in your home. There may be limits on the percentage paid if the item was stolen or destroyed off premises. There are limits for certain categories of belongings as well. Silverware, jewelry, furs, and other expensive items may be subject to a very small amount compared to their actual value, usually a couple thousand dollars at the most. To fix this, you can purchase additional coverage, in the form of a floater or endorsement, so that these items are covered for the full appraisal amount. Most of the time these extra
coverage's will even insure the item against an accidental disappearance, in case you misplace and lose it. There is usually no deductible under this coverage either. This is also the coverage that will protect your trees, plants, and shrubs in your yard and on your property. Typical coverage amounts are up to five hundred dollars for each item, up to five percent of your home insurance coverage. These items are usually not covered against wind damage or diseases, but they are normally covered for damage by lightning, theft, vandalism, and even a plane falling out of the sky.
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Liability Protection Coverage- The liability coverage provision of your home insurance policy will protect you against any financial responsibilities for any bodily injury caused to others by you or family members, and also for any property damage your household may cause to property owned by someone else. This section does not cover your belongings and property, because that is covered under personal belongings coverage, but it does cover all property not owned by you. This coverage will pay any costs of defending you against any civil action resulting from a covered event, as well as any amount awarded to the other party by the court, up to the amount that you have coverage for. You have this coverage no matter where you are when the covered event occurs, not just at your home or even in your home country. Liability coverage will cover any person and pet that lives in your home, so your entire family is covered. The limits set for liability may start as low as one hundred thousand dollars, but a more common amount is three hundred thousand dollars or even more. There are some policies, normally called umbrella or excess liability policies, which include even more covered events, such as slander or liable, and these limits on coverage normally start at one million dollars. These policies can be very inexpensive for the coverage provided, usually costing a few hundred dollars a year for a million dollars worth of coverage. The liability portion of your policy also normally provides a specific amount of no fault medical coverage. If someone is injured at your home, the insurance will cover their medical bills once they are submitted to the company. A liability claim does not need to be filed for these bills to get paid. The limits for this coverage is normally between one and five thousand dollars, and this coverage will not pay for injuries to any person or animal that resides in the home.
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Additional Living Expense Coverage- This is normally the last component of a home, condo, or apartment insurance policy. This will cover the expenses incurred by you and your family if your home can not be resided in due to a covered event, such as a fire or hurricane. This section will cover any hotel bills for shelter while your home is unlivable, and it will also cover meals at restaurants and other living expenses that you have to pay because you can not live at home due to the damage and rebuilding. The usual amount of this coverage type is normally around twenty percent of your total insurance coverage, but this can be adjusted to meet your coverage needs.
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What About The Type Of Coverage Level?
Whether you have homeowners insurance, condominium insurance, or renters insurance, you can choose from three different levels of coverage. These include the actual cash value, the replacement cost, or the extended or guaranteed replacement cost. The coverage level will play a large part in the amount you receive for any belongings which are stolen or destroyed.
· Actual Cash Value Coverage- An actual cash value policy is the lowest form of belonging coverage, but it is also the cheapest when it comes to the cost of the premiums. With this level of coverage, the original amount paid for the item is adjusted for the depreciation amount, and the result is the amount you will receive. This coverage may end up paying you significantly less than it costs to replace the item, and you will have to come up with the difference.
· Replacement Cost Coverage-This insurance coverage will pay the cost of replacing your belongings or rebuilding your home. There is no depreciated value involved, so you get a higher payment to replace the items.
· Extended Or Guaranteed Cost Coverage- This is the premium level of insurance coverage, and this policy will pay whatever the costs are to rebuild your home so that it is identical to what it was before it was destroyed. This will protect you if construction costs rise significantly, or if the price of materials has gone way up. Not all insurance companies will offer these policies on older homes.
Exclusions
Most homeowners, condominium, or renters insurance policies have exclusions, and some exclusions are common and are in almost every standard policy. These include flooding, earthquake, and normal wear and tear. This does not mean that you must be exposed to these financial threats though. There are certain riders, endorsements, and floaters that you can add which will cover these perils, but it will cost you more to do so. Sometimes the extra cost is worth it, such as if you live in an area that has flooded four times in the last five years and you are considering flood insurance.
Determine what the exclusions for your policies are, and whether it is risky not to buy additional coverage to protect you against the excluded risks. Make sure to keep your home well maintained, because one exclusion for most policies is damage due to poor maintenance, so it is imperative to keep your home in good shape, otherwise damage may not be covered under your policy. Having the right insurance coverage, and the right coverage amounts, can protect you against large financial losses and legal liability from property damage or injury. It is normally advisable to make sure you have coverage against every event that could reasonably occur.
Home Insurance: Do You Really Need It in These tough Economic Times?
For many homeowners, homeowners insurance may seem like an unnecessary expense. For many, the fact that they have been covered by this insurance for years and never had to file a claim may lead to a false sense of security, and confidence that the insurance is not needed and can be eliminated. In the tough economic times faced by most Americans, finding ways to cut costs is necessary, but your home insurance is one area that should never be skimped on for many reasons. Many people will lower their coverage limits, raise deductibles and exclude some events, or even cancel their home insurance altogether, and this is a very big mistake. Cutting corners to find cheaper insurance may cost you much more in the long run. Look at all the factors and events covered under your home insurance, as well as the coverage amounts and limits. Determine whether you are over-insured, under-insured, or at the right coverage level. Make sure that you have the coverage you need to protect your home if something happens.
One common way that people cut corners on their home insurance is to drop riders and additions to their policy. Most homeowners insurance will not cover certain events, and common ones are flood, tornadoes, hurricanes, acts of war, acts of terrorism, damage done by pets you own, and normal maintenance and repairs. Many times riders are added to cover a specific event at an additional charge. When money gets tight, you may be tempted to drop these riders, betting on the fact that the event will not happen. You may win this bet, but if you are wrong you could be left with devastating financial losses, and even the complete loss of your home with no insurance coverage to repair or rebuild the home. Sure you may save a few bucks in the short term, but you could end up paying dearly for it in the future.
Another common mistake to save money on home insurance costs is to lower your coverage amounts and limits. Make sure that you have the right amount and types of coverage to offer you the financial protection you need if something happens. It is not a good idea to have fifty thousand dollars of coverage on your items if everything you own is worth ten times this amount. Many homeowners insurance policies will only cover up to a certain amount unless extra coverage is purchased, and this expense should not be cut back either. If your policy only covers up to a thousand dollars worth of jewelry but you own one hundred thousand dollars worth, you are grossly underinsured and may end up regretting it.
Sometimes switching insurance companies may save you a few dollars, but this step may also give you poor customer service or claim adjusting. Determine whether you are lowering the quality as well as the price. If you have to file a claim can you contact someone quickly? How long will it take to get a question answered? Can you reach a live person or do you continuously get stuck in voice mail jail, where you spend an eternity pressing numbers and trying to connect to a representative? All of these factors can affect the quality of the service you receive, and should be considered. It may be worth the expense to keep your coverage at an adequate amount and find some other way to cut your expenses.
Going without home insurance can place you and your finances at incredible risk. Home insurance will cover accidents that happen on your property, ensuring that you do not get stuck with a huge liability or debt, and that you do not have to pay enormous sums as a settlement due to someone slipping and falling on your property. This insurance also covers any damage to the property of others that is done. Without homeowners insurance, if your home is damaged or destroyed you may face extremely high repair or building costs, and you will have to come up with this money on your own with no settlement from the insurance company. Home insurance will cover you, your family, and your property against the damage or theft to your property and belongings. This insurance also protects you against any costs or lawsuits in case an accident or injury occurs at your home or in your yard. Going without home insurance is gambling that nothing will happen, and this can be a fools gamble.
Good homeowners insurance should cover the replacement cost of your belongings and home, have coverage amounts for injury and property damage that are high enough to reasonably cover almost any event, and should include riders for every event not covered which is likely to occur in your area. Your policy should also contain coverage amounts and riders for any belongings which have a value above the total benefit for that item in your insurance policy. Home insurance may be a cost that many people believe they can not afford to pay, but this is the wrong way to view this. The real question is can you afford for something to happen if you are not insured, or if you have low coverage amounts just to save a few dollars. Your home is one of the biggest investments you will make, and a home insurance policy will protect it against accidental damage or destruction through no fault of your own.
Personal belongings coverage is an important part of your home insurance policy. This area will cover your belongings if they are stolen or damaged. Cutting back or eliminating this coverage is a very bad idea. If your home gets robbed while you are on vacation, or a fire breaks out in the home next door and spreads to your residence, you may find that all of your belongings are gone and the amount paid by the insurance company, if any coverage is in effect, may not cover the cost to replace most of what you owned, leaving you with large financial losses.
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