Home insurance transfers the risk of personal loss and liability from the homeowner to the insurance company. If you have a mortgage on your house, your lender will almost certainly require you to have the proper insurance. Even if you don't have a mortgage and own your home free-and-clear, it is still a wise decision to have your home insured.
A policy may be written to cover all listed perils, or it may cover all perils except the ones it specifically excludes. A peril is something that has the potential to cause damage or loss. Perils typically include fire and smoke, hail, wind and lightening. Your policy may also cover vandalism, theft and damage from trees that fall on your house.
What Does a Standard Home Insurance Policy Cover?
A standard policy covers your dwelling, the contents inside your dwelling and certain claims of liability if someone suffers bodily injury or property damage in or near your home.
Your dwelling consists of the house you live in, plus any other detached structures you may have on your property like a detached garage or a storage shed. Your dwelling should be insured for its fair market value and not the amount you owe on your mortgage.
Contents coverage includes personal property such as clothes, furniture, electronics and appliances. You are not required to itemize every item in your home, though it can help in determine how much coverage is right for you. In many cases, the contents coverage may be equal to about half the amount of your dwelling coverage. In the event that you own certain high-value items like jewelry or furs that are not adequately covered under a standard policy, you can add a rider to be fully protected.
Liability coverage can cover the cost of defending yourself against a lawsuit. Some instances where you may be held liable include a guest falling and getting injured on your property, your dog biting the delivery man or your child breaking a visitor's expensive glasses.
Replacement Cost vs. Actual Cash Value
When you purchase home insurance, you usually have the option of paying a slightly higher premium to get replacement cost coverage as opposed to actual cash value coverage. Replacement cost offers better protection because it can pay the full amount to buy a new item of similar quality to the old item that was damaged, instead of the depreciated or fair market value you would receive if you had actual cash value coverage.
Buying a Policy
Knowing the right type of insurance is important, but so too is buying insurance from the right insurance company. To get the right insurance at the right price, sit down and talk to an independent insurance agent.
Are you covered? Call Area Insurance Services at 432-570-4373 for more information on Midland home insurance.