No matter how long you’ve had your home, it’s likely your most valuable asset and makes up the largest part of your monthly budget. Because of this, it’s important to make sure that you’re protected financially if something happens to it. To help you understand what you need to know about homeowners insurance, we’ve put this post together as a simple guide.
What is Homeowners Insurance?
Put simply, homeowners insurance is designed to cover damages that may occur to your home as a result of risks such as natural disasters and theft. In most cases, all of your belongings are also covered by homeowners insurance as well as other structures on your property such as garages or sheds.
What Does Homeowners Insurance Cover?
How much is covered by your homeowners insurance policy depends on what level of insurance you have. For most people, natural disasters such as windstorms, lightning, and excessive weight of snow or ice are all covered. Theft, random vandalism, and damage from rioting are also typically covered.
Something else that homeowners insurance covers is known as personal liability. This refers to your legal responsibility to cover damages if someone is injured on your property, whether by accident or by someone in your family.
For the vast majority of homeowners, there’s no need to worry because nearly everything that could happen to your home is covered, including damage from aircraft. However, there are some things that are not typically covered by homeowners insurance which could cost you if you find yourself facing one of those situations.
What Does Homeowners Insurance NOT Cover?
Because the damage from tornadoes, floods and earthquakes are typically devastating, these are not covered in standard homeowners insurance, though they can often be added onto a policy for an additional cost if you live in an area that is prone to these disasters.
In most cases, things like neglect and intentional damage by the homeowner are also not covered by homeowners insurance. Another cost that is often not covered is changes of ordinances or laws, so if you find yourself with outdated wiring because the law has changed, that’s a cost you’ll need to cover yourself to update it.
How Does Homeowners Insurance Help in the Event of Loss?
If you are unfortunate enough to experience a loss by something that is covered by your homeowners insurance, then you’ll start by filing a claim. From there, how much you get will be determined by whether you have “actual cash value” or “replacement coverage.”
Actual cash value will provide you with money based on the current value of your home and possessions. That means if you paid $1000 for a computer 10 years ago that is now valued at $200, you’ll get $200 for the computer.
Replacement coverage, on the other hand, will provide you with the amount of money that you actually need to replace the item that was lost. So, for that same computer that you bought for $1000, replacement coverage would give you $1000 to buy a brand new computer.
Although replacement coverage is obviously the better option in terms of what you get out of it, it’s also more expensive on a yearly basis which is why people choose to go with actual cash value coverage.
Hopefully this provides you with some basic information so you know what questions to ask when you’re looking for homeowners insurance. Of course, if you choose to purchase a home through Tollberg Homes, you’ll have a solidly built home in pristine condition and all build parameters up to current code.
Questions? Feel free to call Tollberg Homes at (763) 205-2037, or better yet, schedule a consultation to view our new home plans and own a home of your very own!