Home Insurance Basics: What You Need to Know

Your home is one of your most valued possessions. Home insurance covers any damage to your house property and personal items within your home. It generally covers interior and exterior damage, any damage to your personal items, and other liability claims.

How Home Insurance Differs from Mortgage Insurance

When applying for a mortgage, you’ll have to provide proof of insurance before you are approved for the loan. Try to look at multiple offers before making a decision. Home insurance differs from mortgage insurance. Mortgage insurance is generally required by the bank or mortgage company. You will have to pay at least 10% of the cost of the property. The Federal Home Administration also mandates that you purchase mortgage insurance if you are trying to obtain an FHA loan. Mortgage insurance covers lenders for approving buyers who don’t qualify for the loan. Homeowners insurance, on the other hand, protects the homeowner.

Types of Coverage under Home Insurance

    • Property Damage

      Home insurance covers any damage to the interior and exterior of your home due to an accidental fire or severe weather. It also covers your personal items if they are stolen, damaged, or vandalized. If you own several luxury items, you may need to add extra coverage to protect those items if something happens to them.

    • Personal Liability Coverage

      Personal liability coverage protects you if someone gets injured on your property. Slip and fall accidents are common, as well as accidental pet bites. If you have a pet or a high-risk amenity such as a swimming pool or trampoline in your backyard, consider adding umbrella insurance as another layer of protection.

    • Temporary Living Coverage

      If your home suffers severe damage, temporary living coverage will reimburse you for any expenses you incur as you find somewhere else to stay while your home is being repaired.

How Home Insurance Policies Are Valued

  • Actual Cash Value

    If your policy is based on actual cash value, it covers the cost of your home plus the value of your personal items after measuring depreciation.

  • Replacement Cost

    Your policy’s replacement value covers the cash value of your home and your possessions without calculating depreciation.

Keep in mind that there are exclusions to your home insurance coverage, such as earthquake or flood damage. You are also left uncovered if your home has sewer or drainage damage. You will have to purchase special coverage to protect your home in these scenarios. Any damage to your home that occurs as a result of poor maintenance is also uncovered.

Why Should You Buy Home Insurance?

Home insurance provides a financial safety net if something goes wrong. Without home insurance, one liability claim could put your assets in danger. Serious damage to your home may cause a financial strain as you cover the repairs out of pocket.

Searching for the right home insurance policy can be complicated at times. The experts here at First Insurance Solutions will help you find the right policy for your situation. Contact us today to get started!

By First Insurance Solutions

First established in 2003, the experienced insurance consultants at First Insurance Solutions provide unmatched insurance solutions to increase indemnity against personal and business risks. We aim to provide businesses and individuals with quality, reliable insurance policies that meet their needs and budget.