Homeowners Insurance Policy in United States

Homeowners Insurance Policy

Own house is perhaps the largest purchase a person ever makes. It is important to protect your largest investment in order to be sure in the well-being of your family.

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

Coverage of the Structural Elements of the House

The Homeowners Insurance Policy covers the cost of repairing or renovating the house if it is damaged by fire, hail, lightning, hurricane, etc. In most cases, the insurance policy also applies to constructions adjacent to the house (garage, shed, gazebo, etc.). The coverage of free-standing buildings is usually equal to 10% of the total insurance coverage of structural elements.

Important! The standard insurance policy does not cover damages caused by natural floods or earthquakes.

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

Personal Property Coverage

The insurance policy reimburses the cost of items in the house: furniture, clothes, household appliances, sports equipment, etc. The insurance policy covers the owner's personal property in case of theft, accident or natural disaster. The standard coverage for the personal property is equal to 50%-70% of the total amount insured.

The inventory of items in the house will help you understand how this coverage may be beneficial for the owner of residential real estate. This type of insurance includes the safety of personal belongings while being away from home.

The policy includes the reimbursement of jewelry, antiques and works of art in case of theft, but it limits the amount of compensation. In order get the full cost of the stolen property, it is necessary to purchase the estimate of the personal property and insure the valuable item at its real value.

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

Liability Protection

If the homeowner or his/her family members or pets cause damages to neighbors or their property, the insurance policy will cover such expenses. The insurance policy also covers the cost of representation in court and related legal fees.

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

Important! Your liability coverage starts at $100,000. 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 if your house becomes uninhabitable as a result of an accident or natural disaster covered by such policy. It includes paying hotel bills, reimbursing restaurant meals, and other expenses that may arise while renovating your house.

If the house is destroyed when it is rented, the ALE insurance policy will cover the rent for the period until the property is brought into proper form, so that the owner may continue to receive income from renting the house.

What Does the Standard Homeowner Insurance Policy Include?

The Homeowner Insurance Policy does not include:

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

Optimal House Insurance Policy

Depending on the individual needs of the homeowner, the insurance policy may cover:

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

Data Collection

Various insurance companies may provide you with the exact cost of insurance only after the collection of all data about the house. Each homeowner should prepare the following:

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

Selection of the Best Offer

How Advantageous Is the Insurance Offer? You can find out it at no charge by visiting the websites of several insurance companies and comparing their offers. In most cases, the future client is offered to use a free online calculator.

Comparison of Different Insurance Policies

When comparing insurance policies:

  1. Consider the same parameters. Compare each type of coverage among several companies.
  2. Consider more than just the price: the cheapest is the dearest. When comparing companies, it is worth considering not only the insurance premium, but also the stability of the company, feedback, history of claims, etc.
  3. Be fair-minded. Do not be afraid to ask questions and say no. Do not stop at the first company you see.

How Can You Lower the Insurance Premium?

There are different ways to save money when taking out an insurance policy as in case of making any other purchases:

  1. Choose the package of services. Most companies offer not only home insurance but also vehicle insurance. By agreeing to the package of services, you can get the maximum discount.
  2. Increase the amount of the deductible. You can save money on your regular insurance premium by setting a larger amount of the deductible. Make sure you can afford such amount if you have to file a lawsuit.
  3. Make repairs in your house. The annual insurance premium may be lower if the house is in a good condition: re-roof, replace windows, change electrical wiring, etc.
  4. Do not overdo with claims! Any unsubstantiated claims regarding the Homeowners Insurance Policy may negatively affect your rates.

Policy Revision and Payment Issues

After you have clarified all the questions and decided on the Homeowners Insurance Policy, it is important to check some points in your policy before signing it:

  • Effective date. It can be the date when the new house is purchased or the expiration date of your current Homeowners Insurance Policy.
  • Insurance premiums and coverage. Check the insurance premium and additional payments.
  • Homeowner's liability. Check the amount of the deductible and the terms and conditions of its payment.

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

Insure Your Home Regularly

We recommend you to renew your Homeowners 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. Your needs and preferences may change, so consider different options.