Importance of Having Home Insurance Policy

Home insurance

Home is the most valuable asset of maximum people in this world. Yet, only a handful people have home insurance to protect their dwelling. Home insurance protects your most valuable asset in several ways. It will help you become financially whole after following a loss.

The memories of landslide in Uttarakhand and the Floods in Jammu and Kashmir along with the massive earthquake in Bhuj are still fresh in our mind. Thousands of people lost everything they had in the natural calamities. Many people lost their home. The Government promised to help them, but the amount given by the Government surely wasn’t enough. In such a situation having a home insurance would’ve helped the people to remain financially stable after incurring the major loss. The insurance company would’ve paid to fix or replace your property.

What all does home insurance cover?

  • Home structure

If the damage to your home falls under the scope of the policy, then the insurance company will pay for rebuilding your home. The amount of coverage will determine how much the company will pay for the repairs and rebuilding.

Most of the policies cover damages caused which are “sudden or accidental”. So, the slow leak destroying your roof won’t fall under your insurance coverage. But, the damage caused by a storm will.

Flood damage and earthquake damages are often separate policies, so check before buying a policy to see what all it covers.

Typical damages covered in a policy are:

  1. Fire
  2. Tornado or Hurricane
  3. Hail
  4. Theft
  • Replacing damaged belongings

Most of the insurance policies also cover your belongings in case of serious damage to them. When a natural calamity strikes or you are robbed, the cost of replacing all the necessities you have can be sky-rocketing. In such a situation having a home insurance will help to lower your financial burdens. You should make a list of all the belongings you have to estimate how much coverage you will need. This list will come in handy while filing a claim for the damaged products. Often, high-valued things are art works and antiques need a rider for coverage. A rider a simply an extra insurance for the specific item which is attached to the regular policy later.

  • Liability coverage

In addition to covering the structural cost of your home and the other belongings, home insurance policies have a special provision that includes liability coverage. No one wants any person to get hurt on their property. But sometimes, no matter how careful you are, accident do happen. Your friend might slip on the ice and break a leg, or your barbeque might burn down your neighbour’s house or your dog might bite the kid down the lane. While we hope that you don’t face such problems, but protecting yourself against such conditions can surely be helpful. Liability coverage will help you to pay for the repair costs, legal fees or the medical bills of the damaged property or injured person, caused because of you.

  • Additional living expenses

Imagine a situation where there has been a fire in your house and everything has burnt down. In such a situation you cannot live in that house, so your home insurance company pays for your temporary living costs, in a hotel, until your home becomes habitable again.

It is very important to know that all the coverage has limits and there is a maximum amount which your insurance company will pay in case of a damage. While selecting your coverage limits, remember to consider things like cost of rebuilding your home or replacing your belongings properly. Evaluate the value of your belongings properly.

While, having a home insurance won’t prevent the damage caused to your home or your precious belongings, it will act as a safety net to pull you out from financial crisis in case of such unexpected scenarios. With a home insurance policy you will be better equipped to face any storm or quake as you know that you can always come back on your feet, financially.

About Jennifer Cribsly

I'm a former real estate broker who specialized in helping first time buyers be able to purchase a home. Now full time mom, part time real estate owner/investor.
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