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Homeowner's insurance policy

19.04.2021
277
6 min.

Own home purchase can happen to be the biggest a person ever makes. That is why it is important to protect your largest investment in order to be sure in your family well-being.

Homeowner's insurance policy

The Homeowner's Insurance Policy usually includes coverage of dwelling structural elements and owner's personal belongings, protection from liability for any personal injuries and property damages as well as additional living expenses (ALE).

Coverage of Dwelling Structural Elements

The Homeowner's Insurance Policy covers costs of home repairing in case its damage is a result of fire, hail, lightning, hurricane, etc. In most cases insurance policy applies to constructions adjacent to the dwelling (garage, shed, gazebo, etc.). Coverage of free-standing buildings is generally equal to 10% of the total insurance coverage of structural elements.

Important! A standard insurance policy does not usually reimburse damages caused by natural floods or earthquakes.

If you are a homeowner and plan to take out the insurance policy then it makes sense to perform an inventory of all constructions on your plot and estimate their value.

Personal Property Coverage

An insurance policy covers costs of items situated inside a building such as furniture, clothes, household appliances, sports equipment, etc. as well as owner's personal property in case of theft, an accident or natural disaster. Standard coverage rate for personal property is 50%-70% of the total amount insured.

In case you perform an inventory of items inside a dwelling it will help you understand in what terms such coverage may be beneficial for an owner of residential real estate.

The policy includes reimbursement of jewelry, antiques and works of art costs in case of theft but it limits the amount of compensation. In order get the full cost of stolen belongings you should order the estimate of your personal property and insure valuable items at their real value.

Vegetation near a house will also be covered by an insurance policy in case of damages (but not from diseases or due to insufficient care) and the amount averages $500 per tree/bush.

Liability Protection

If a homeowner, family members or pets cause damages to neighbors or their property the insurance policy will cover such expenses as well as the cost of representation in court and related legal fees.

The insurance policy includes medical insurance applicable if someone is injured in your home and such expenses are reimbursed without a liability suit. Medical bills for treatment will be sent to your insurance company. Please note that it does not apply to medical bills related to treatment of family members of the insured or his/her pets.

Important! Your liability coverage starts at $100,000 and a higher amount can be discussed with your insurance agent.

Additional Living Expenses (ALE)

The ALE (additional living expenses) insurance policy covers all housing and food expenses in case your home becomes uninhabitable as a result of an accident or natural disaster covered by such policy. It includes paying hotel bills, restaurant meals and other expenses that may arise while your house is being renovated. If a dwelling is destroyed while being rented the ALE insurance policy will cover rent for the period until the property is brought into proper form so that the owner may continue receiving income from housing rental.

What Does the Standard Homeowner's Insurance Policy Include?

The Homeowner's Insurance Policy does not include:

  • flood and earthquake insurance,
  • accident insurance due to improper house maintenance

Optimal House Insurance Policy

Depending on a homeowner's individual needs the insurance policy may cover:

  • dwelling and adjacent constructions (garage, bath house, shed, gazebo, summer kitchen etc.),
  • personal property which includes reimbursement for the value of items inside the building,
  • personal liability which means reimbursement for damages incurred by a third party on your territory as well as all damages caused by your family members or pets to a third party (including payment of medical bills),
  • additional living expenses (ALE) are related to your staying at a hotel or rented house during the home renovation which has become unusable as result of an accident or natural disaster covered by the policy,
  • protection against natural disasters and protection of the personal data from theft, etc. are not included in standard insurance policy terms

Data Collection

Various insurance companies may provide you the exact price of insurance only after all data collection about your dwelling. That is why each homeowner should get ready to share the following data:

  • valid policy (if available)
  • home assessment report
  • home inspection report
  • data on family members
  • utility plan with the date of relevant works
  • technical data sheet of the dwelling
  • assessment of personal property cost and condition
  • assessment of cost and risks associated with special items (weapons, jewelry, antiques)
  • details about a mortgage company and a relevant loan number if applicable

The Best Offer Selection

Is case you are in search of an advantageous insurance policy you can get information for free by visiting different insurance companies websites and comparing their offers. In most cases a future client can use a free online calculator.

Comparison of Different Insurance Policies

When comparing insurance policies you should

  1. Consider the same parameters and compare each type of coverage among several companies.
  2. Consider not only the insurance premium but also the stability of a company, feedback, history of claims, etc.
  3. Be fair-minded and do not be afraid to ask questions and say “No”. It makes sense to select among several companies.

How Can You Lower the Insurance Premium?

You can save money when taking out an insurance policy in different ways like:

  • Choose the package of services. Most companies offer not only home but also vehicle insurance so by purchasing the package of services you can get the maximum discount.
  • Increase the amount of the deductible. You can save money on your regular insurance premium by setting a larger amount of the deductible but you need to make sure you can afford such amount if you have to file a lawsuit.
  • Make repairs of your dwelling. The annual insurance premium may be lower if the house is in a good condition so that is better to re-roof, change windows, electrical wiring, etc.
  • You should be careful not to overdo with claim as any unsubstantiated claims regarding the Homeowner's Insurance Policy may negatively affect your rates.

Policy Revision and Payment Issues

After you have clarified all the questions and made your decision on the Homeowner's Insurance Policy it is important to check some points prior to signing the contract:

  • Effective date. It can be the date when the new dwelling is purchased or the expiration date of your current Homeowner's Insurance Policy.
  • Insurance premiums and coverage. Please check the insurance premium and additional payments.
  • Homeowner's liability. It is worth checking the amount of the deductible as well as terms and conditions of its payment.

When paying the insurance premium on your own it is worth learning more about various payment methods. If a mortgage company is liable you'd better find out what is required of you to ensure timely payment.

Insure Your Home Regularly

We recommend you to renew your Homeowner's Insurance Policy annually. Thus, you will have the latest data on the current offers of insurance companies. You do not have to choose the same company as your needs and preferences may change.

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