Homeowner’s insurance policies are powerful financial tools that can protect your home and your family from unexpected accidents and Disasters. When you have adequate coverage for a homeowner’s insurance policy, you can rest assured that your home and possessions will be repaired and replaced if a covered peril damages them.
However, many consumers do not understand the benefits associated with a homeowner’s insurance policy, so today, we will discuss some of the top reasons homeowners insurance policies are excellent options for most Homeowners.
Homeowners’ insurance policies operate like most other insurance products. You get to choose your coverage amount, deductible and add any additional coverages that you may need.
There are different types of homeowners policies depending on how old your house is, what condition it’s in, and how much coverage you intend to purchase.
Most policies have enough coverage to rebuild your house if it is destroyed, and the rest of the coverage in the policy is relative to the entire replacement cost for your home.
For example, if your home costs $250,000 to replace, and your personal property coverage is 55% of your home’s total value, then your property replacement maximum is $137,500.
Another important aspect of homeowners insurance is making sure you have sufficient coverage for excluded perils. Most homeowners insurance policies exclude flood damage and earthquake damage, so if you live in an area that is prone to floods or earthquakes, you should consider purchasing additional insurance in the event of a flood or earthquake.
Now that we’ve covered the basics of homeowners insurance policies, let’s discuss some of the top reasons you should consider purchasing a policy.
- Potentially Save Thousands Of Dollars
Repairing or rebuilding an entire home can cost hundreds of thousands of dollars, not including the price to replace the clothes, electronics, and personal belongings. If you do not have homeowners insurance and your home Is severely damaged, you will be on the hook to pay for all of the repairs out of pocket.
By purchasing a homeowners insurance policy, you would only have to pay your deductible, even if the house is completely destroyed.
Since home repair and rebuilding is such an expensive proposition, and homeowners insurance premium is well worth it.
- Your Lender May Require It
If you have a mortgage on your home, your lender most likely requires you to have a homeowners insurance policy. Since your lender is taking a risk by issuing a large loan, a homeowners insurance policy automatically reduces their risk of loss. If anything happens to their investment, the insurance company will pay for the damages.
- Lower Your Risk
Homeowner’s insurance also pays for any medical or liability expenses if somebody is injured at your house. Lawsuits and medical bills can be costly, so it’s essential to protect yourself from potential legal exposure.
Even if you are not at fault, it is better to have legal protection and not use it versus somebody getting injured on your property and taking you to court.
- Bundle Discounts
Many insurance providers offer various policies, including homeowners, auto insurance, and life insurance. If you are happy with your auto insurance or life insurance provider, you may be able to snag a discount by bundling your homeowner’s insurance with the same provider.
Bundling insurance is straightforward, and it is a great way to get the maximum amount of coverage at a discount.
- Secure Your Belongings
Most people have a majority of their possessions in their homes, and if there is a substantial loss caused by a disaster such as a fire or lightning strike, most of your personal property could be destroyed or damaged as well as your home.
Thankfully, homeowners insurance replaces or reimburses you for the loss of personal property and possessions. If you do take out a homeowners insurance policy, make sure that you take an inventory of all of you and your family’s belongings to come up with an accurate estimate for the aggregate value of your property.
If you need to file a claim, keeping this number on hand and providing accurate descriptions will save time and help get your claim approved quickly.
- Emergency Lodging
Some disasters May render your home unlivable while it’s being repaired. If you have homeowners insurance, your policy will step in to pay for temporary lodging while you are home is being repaired.
This can include food, hotel, or apartment rent, and more so that you don’t have to pay for these expenses out of pocket.
As you can see, homeowners insurance does a lot more than paying for repairs. By maintaining adequate homeowners insurance coverage, you will not have to worry about heading for repairs and other covered losses because your policy will reimburse you.
If you want to learn more about when homeowner’s insurance or compare rates from some of the top providers, check out our other guides and reviews!
* This content is not provided by the financial institution or the offer’s provider. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and does not constitute a financial or expert advice.