Having a home for yourself and family is like a dream come true for most of us. Buying a home is one of the biggest aspirations for anybody.
So, it becomes invariably important that we should protect and safeguard it from any calamity or unforeseen events like fire, theft or other types of damages.
To overcome these uncertainties, the instrument that can effectively protect you from financial loss arising out of damages and other mishaps to your home (of any sort and extent) is a Home Insurance. It is also known as Homeowners Insurance.
In this presentation, we have enumerated Home Insurance Importance and Benefits.
- 1 What is Home Insurance?
- 1.1 Hazard Insurance
- 1.2 Liability Insurance
- 1.3 Exclusions
- 1.4 Importance of Home/Property Insurance
- 1.5 Homeowners Insurance Provides Protection Against Natural Disaster
- 1.6 Covering your Household Belongings
- 1.7 Property Insurance cover damage to the House
- 1.8 Home Insurance for protecting more than your Home
- 1.9 Is Property Insurance Mandatory?
- 1.10 How to execute a home insurance policy?
- 1.11 Average Home Insurance Cost
What is Home Insurance?
A Home Insurance is a type of Property Insurance which is used to protect an individual’s home against damages such as fire, theft, etc. It also provides coverage against accidents in the home.
You should make it a point to have a Home Insurance in place as soon as you purchase a home. In the U.S., various homeowners’ options are available depending upon the need of the homeowner.
A homeowner’s insurance provides coverage for your dwelling, personal property, guests and also additional living expenses.
Nowadays, people get home insurance for the same reason they take out health insurance or also car insurance.
By having home insurance, owners try to recover financial losses that arise in case a home is damaged, or someone gets injured on the property.
In fact, homeowner insurance or homeowners insurance is a combination of two different types of insurance (protection) that is hazard insurance and liability insurance.
Hazard Insurance safeguards you against unintentional destruction or damage to your house or its contents.
It ensures you against fire, theft, storm, vandalism, and similar threats. It covers the cash value of the damages or their replacement value.
The replacement value pays enough to replace that which is lost or damaged.
However, the cash value only pays you what a property is worth. So, the cash value of a five-year-old $1000 television is not $1000 as it depreciates with age making it less worth in the insurer’s eyes.
Liability insurance gives coverage against accidents on your property.
So, for example, if your neighbor trips in your yard and breaks his ankle, the liability insurance will pay you for meeting his medical expenses, up to the policy limit.
Thus, Home insurance includes both Hazard Insurance as well as Liability Insurance.
Nowadays, mortgage companies require you to have homeowners insurance in place.
When you take out a mortgage, your house is the lender’s collateral. So, the lender wants you to buy a minimum level of home insurance that includes hazard insurance.
However, you can buy a greater amount of property insurance than the minimum.
You need to bear in mind that a home insurance doesn’t safeguard you against everything.
Home insurance does not cover flood damage and earthquake damage. That said, there are separate flood and earthquake policies that may be available where you live.
In case, a house or building is damaged more than 50 percent, home insurance will not pay the cost of upgrading wiring or roofs.
Importance of Home/Property Insurance
Here, we list out the importance and benefits of having Home Insurance.
It will help you to appreciate why we need property insurance.
It should be noted that the importance of an insurance policy (here home insurance) is not appreciated unless and until you need it.
At the time of calamity or mishap, the only instrument that can take you through and overcome such great financial problems is house insurance.
Let us elaborate this more so that you can fully understand the importance and benefits of home insurance.
The need for having homeowner insurance arises from the fact that your investment will be protected.
By having homeowner’s insurance policy, you make sure that you don’t have to worry about something bad happening to your home, and you not able to fix it.
Although home insurance does not cover every incident, it does take care of a lot of things.
Moreover, taking out homeowner insurance is not at all expensive when compared with other types of policies. You can have a good home insurance policy at a low monthly premium.
That said, it does depend on the type of home you have so you should check the insurance rates before you on to buy a property.
Then, home insurance helps to lower the stress that you have to deal when it comes to the condition of your home. By having a top-notch home insurance policy, you can cover much of the dangers that lurk in your home.
Plus, there are many more benefits of having property insurance.
Let’s explore the advantages of home insurance.
Homeowners Insurance Provides Protection Against Natural Disaster
First, you do not have control over a natural disaster. The best thing you can do is to get the support of an insurance policy in the form of a home insurance.
So if a natural disaster strikes and your house is also affected then, only a homeowner insurance is such an instrument that would reimburse all your losses occurring due to house damage.
Covering your Household Belongings
Another great benefit of having a Property insurance is the fact that it not only protects the building in which you live in but also the belongings and contents of your house.
When you take a homeowners insurance, you can rest assured that both the building and the contents of your house are well protected from perils.
With homeowner insurance in place, you get a financial cover guarantee against the risk of loss of your household belongings due to the occurrence of any calamity, peril, or mishap.
Property Insurance cover damage to the House
Homeowners’ policies provide coverage against damage to the house due to fire, vandalism or any other specifically covered events. It also covers loss or damage to personal property due to theft or other covered events.
Additional riders are available for covering loss of expensive jewelry or in case someone gets injured on the property.
Home Insurance for protecting more than your Home
A home insurance coverage includes more than just the physical structure of your house. A Property insurance policy may provide coverage for:
Covers your dwelling – if your home or attached structures get damaged by a covered peril, then the Homeowner’s Insurance can be used to pay for the repairs.
Covers loss of personal property – Your house insurance policy may cover the loss of certain belongings such as furniture or electronics that get stolen or damaged by a covered loss.
Guests – Your policy may cover medical bills resulting from accidental injury to a guest at your home.
Other structures – your policy may cover expenses incurred for repairs or replacement of detached structures on your property when they get damaged by a covered peril.
Is Property Insurance Mandatory?
Unlike Car Insurance, you are allowed to own a house without the necessarily having homeowners insurance legally. However, property or home insurance becomes a necessity, particularly when there is a mortgage on a home.
The lending institution makes it sure that their collateral is protected by making you take a home insurance.
So, if any damage occurs to your home, the debt is taken care by the home insurance that you had taken earlier. House insurance also comes handy and protects you from lawsuits due to any injury occurring in your house.
How to execute a home insurance policy?
Having discussed the importance and benefits of property insurance, we would now focus on how you can execute homeowners insurance.
We would list down the basic steps, and it may be quite possible that these may differ from one insurance company to other, and home insurance procedure can be different in the country to country.
To get home/property insurance, you must first approach an insurance company.
As house insurance is a subject matter of a General Insurance Company, you must not approach a Life Insurance Company for getting a home insurance.
You need to submit the legitimate papers belonging to the house.
The insurance company then assesses the real worth of the property and decides the degree of insurance coverage that can be given.
Things to know before taking a Home Insurance
Concerning home insurance, three things are very important and need careful attention.
One is the amount of insurance coverage that you are getting on your property, second is the amount of yearly premium that you need to pay to get the insurance was done, and the third one is the ease and time taken to settle the homeowner insurance claim.
Again these three things related to Property insurance may differ from one insurance company to other.
So, you should choose such an insurance company for which all these important points are in your favor meaning the premium should be low, insurance coverage relatively high and the claim process easy and fast.
You should be aware of the claim settlement process so that you may get the reimbursement timely and without any hassles. In the case of damage to your property or any mishap, you should immediately contact your insurance company and file the claim.
Average Home Insurance Cost
The average cost of home insurance in the USA (2017) is $1083 on an annual basis. However, some states are more expensive than the average home insurance cost, and some states are cheaper than average.
For example, states such as Idaho, Arizona, Delaware, and California have cheaper than average home insurance rates. However, states such as Alabama, Colorado, Connecticut, and Florida are more expensive than average home insurance rates.
That said, the home insurance rates have risen steadily throughout the United States, up by over 50% in the last 10 years alone.
Homeowner insurance is an absolute necessity and very important indeed. It would only cost you some extra money, but homeowners insurance for your sweet home would provide you complete peace of mind.
Thus, if you do not have a home insurance, then you should go for having it as soon as possible. Isn’t it so?