There is no question that your home is one of the biggest financial investments you will make in your life. And as such, it is your responsibility to protect it against various damages, disasters or accidents that may put your property in a fragile state. One common way of doing so is to obtain homeowners insurance.
Generally, people purchase home insurance before closing on a home they are considering buying. Although the coverage isn’t required by law, mortgage lenders may ask homeowners to do it to protect their investment and provide money in case the property is damaged or destroyed in any way.
While most people understand the importance of getting homeowners insurance, they may still have a few questions about what it is and how to get it. This post takes a deeper look at what home insurance covers, how much it costs and what benefits you can reap from it.
Cost of homeowners insurance
The cost of homeowners insurance depends on a number of factors, including the coverage plan you select, the features of your home and the value of your personal belongings. Also, some insurance companies may even take your credit score into consideration as your rating can affect your rates by either reducing them or increasing them.
To compare home insurance rates, it is always a good idea to shop around and compare multiple quotes on reliable insurance brokerages such as Brokerlink to get a plan that protects what’s important and fits your just right. Such sites make buying insurance easier as you have plenty of options available, giving you the opportunity to find the perfect policy at a great price.
Types of homeowners insurance coverage plans
In general, there are eight different types of standard homeowners insurance policies that you may encounter. They are numbered 1-8 and each type offers different levels of protection. These are:
- HO-1 Basic Form
- HO-2 Broad Form
- HO-3 Special Form
- HO-4 Contents Broad Form
- HO-5 Comprehensive Form
- HO-6 Unit-Owners Forms
- HO-7 Mobile Home Form
- HO-8 Modified Coverage Form
Out of these, HO-3 and HO-5 are the most commonly purchased home insurance plans by homeowners.
For example, HO-3 insurance covers your home, your personal property, liability, additional living expenses and medical payments. It also gives you “open perils” coverage for your home structure which protects you against all disasters except defective construction or maintenance, pet or animal damage, pollution and corrosion, theft, flood, neglect and a few others.
The HO-5 policy is another comprehensive home insurance option which covers basically the same things as HO-3, but it is more suited for individuals who have high-value items, such as art, jewelry and electronics.
At the end of the day, the type of home insurance policy you choose will depend on the type of structure you are covering, its age and condition, the type of coverage you want or need and the requirements of your mortgage lender.
Benefits of homeowners insurance
Homeowners insurance also comes with a number of benefits such as:
- Protection of your main dwelling
- Covers home’s contents
- Protection from natural disasters
- Protection from lawsuits
- Covers extra living expenses
- Liability coverage
For example, dwelling protection helps cover the structure of the home where you live such as the house’s foundation, walls and roof as well as the detached structures like your garage, tool shed and fence. In case your home gets damaged by fire, vandalism or bad weather conditions, your insurance will cover the costs for any repairs or rebuilding you may have to do.
Another great benefit of obtaining home insurance is that it provides considerable relief. In other words, you don’t have to live with the constant fear of bearing the expenses of any damages or accidents that your property may incur. With a premium policy, the protection of your residence will no longer be your responsibility.
Despite contrary belief, homeowners insurance isn’t a luxury. In fact, it is necessary that you have it in order to protect your property and personal possessions against damages, disasters and accidents of any kind. Depending on your needs, there are different types of home insurance plans to choose from, each offering various levels of protection and providing numerous benefits.
For more information on this matter, read our post and learn the basics of what homeowners insurance is, what it covers and how you can benefit from it.