If you are a homeowner still paying on the home, chances are you are required by your bank to carry homeowner’s insurance. This is because the bank is investing in the home and using it as collateral. If something happens to the home, they want to be made whole. If your home is paid off, you may not be required to have homeowner’s insurance but it is generally a good idea to have it to protect your investment. A basic homeowners insurance policy consists of coverage from theft, damage and natural disaster for the home and its contents. However, there are exceptions and limits in each policy that need to be examined to ensure you are getting the best coverage possible. Just because you have basic homeowners insurance does not mean you have sufficient coverage.
In a basic homeowners insurance policy, the structure of the home and contents are covered. In addition, there is generally liability coverage and compensation for housing if your home becomes uninhabitable. However, certain property damage is not covered by basic homeowners insurance. Floods and earthquakes are generally not covered and need additional coverage to protect against that. This is especially important if you live in an area prone to either of those natural disasters. While contents are covered, there are certain limits to the coverage you have.
It is important when considering basic homeowners insurance to do an inventory of your belongings to assess the value. You may need to increase the content insurance to cover all your valuables and possessions. If everything were destroyed, would your insurance be able to cover the cost of replacing everything? If the answer is “no” it may be time to look into increasing your basic homeowners insurance. Also, if you have high dollar possessions, there may be a cap on what is covered per item and you may need additional coverage for those items. Computer equipment and jewelry are among the most common belongings needing additional riders.
If you have basic homeowners insurance this is a good start and it will protect you in the case of damage, theft or liability. However, it is important to assess your belongings and determine if the limits of coverage are sufficient to replace everything that may be lost in case of a disaster. Take an inventory of your home and its contents and share this with an insurance agent. The agent will be able to compare your coverage against your possessions and make recommendations on whether or not you need additional coverage than the basic homeowners insurance.
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