For many people, the purchase of a home is the largest financial investment they’ll make. Once you sign on the dotted line for a mortgage, it’s up to you to ensure your investment remains a good one. To do that, you’ll need to do more than keep the landscaping in check and the air filters clean. Perhaps the most important decision you’ll make to protect your investment is to select the right type of home insurance for your needs. Insurance aids in minimizing the financial impact accidents and other incidents can have on your wallet. Consider these very specific types of coverage your home needs.
#1: Cover for the structure of the home
The first step is to protect the structure of the home. Your home insurance will be, at the heart, a tool to protect your property. It can help in events when the home is damaged as a result of unpreventable or accidental incidents. This includes damage from fires, hail, lightning, hurricanes, and other events. The policy should be carefully considered. Purchase a policy that protects the property in case of a total loss by considering the cost to rebuild the home. This is not the same as the home’s value, which is likely to be lower than the cost to rebuild.
#2: Personal belongings coverage
Often called contents coverage, home insurance also provides protection for your personal belongings in situations where a covered event occurs. For example, if your home suffers a significant fire and your clothing, computer equipment, and other belongings are lost, this component of your home insurance policy steps in to help you to recover the losses. On average, it will cover 50 to 70 percent of the insurance on the structure of the home in contents. It’s always best for homeowners to document each of the items they own through a description or photo. This makes filing a claim easier to do.
#3: Liability coverage
The next area of focus for homeowners needs to be on liability risks. If someone were to fall and be hurt while visiting your home, you could be financially responsible for their medical bills and other losses. Liability insurance is very important for property owners. It is a key component of any homeowners’ insurance policy. This policy will likely pay claims made against you as well as your legal defense. Most liability insurance claims begin at $100,000 of coverage, but you may need more in some cases. An umbrella insurance policy can extend this coverage further, offering more financial protection. This is a good idea for those who have previous claims, for example.
#4: Added valuable coverage
For those homeowners who have personal belongings that are of a high value, it may be important to consider an add-on policy for those needs. For example, you may own high-end computer systems, perhaps a gaming computer or a specialized photography system. These belongings may be worth significantly more than the limit on your basic contents coverage. Adding an endorsement to your base policy can help you to pay the costs associated with covered losses on these items. Carefully look at the amount of coverage your contents protection offers and any possessions valued higher than this.
#5: Flood insurance
One type of natural disaster that’s often excluded from basic home insurance policies is flooding. Floods are very damaging. If you live an area that is high risk, you’ll need to purchase a separate flood insurance policy. These policies will help to cover the losses you face when your basic home insurance policy limits your coverage. Keep in mind that flood insurance is not a given on traditional home insurance; it needs to be added separately. Ask your insurer if you have this coverage and, if not, add it. Even in low-risk areas, the need for flood coverage is important.
Home insurance is one of the best investments you can make to protect your business. You’ll also want to consider additional types of coverage, such as additional living expense coverage and policies to cover your home business. With comprehensive home insurance, your risks are minimized and your assets remain protected. Take the time to choose a policy that’s best suited for your specific needs.
By Sandy B