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Homeowners Insurance 101: Everything You Need to Know

Homeowners Insurance 101: Everything You Need to Know

As a new homeowner, you will have many responsibilities you didn’t have to worry about before. One thing that is definitely on your to-do list as you approach your settlement date is selecting a homeowners insurance policy. If you are financing your home with a mortgage, your mortgage company most likely requires that you have your homeowners insurance lined up before you can settle on the home.

  • You’re probably asking questions like:
  • How do you know what type of coverage is best for me?
  • Are there any riders or special types of insurance I should have?
  • How do I know which choice is the best deal?

You know you want to protect yourself if you face any natural disasters or tragedies, but, like most new homeowners, you don’t know much about homeowners insurance. Luckily, the basics of homeowners insurance are not hard to understand.

What Is Homeowners Insurance?

A homeowners insurance policy provides you with financial protection if you face a disaster or an accident involving your home. This coverage can extend not just to the home structure itself, but to other structures on your property and to the items you have inside the home. If a situation arises that prohibits you from using the home due to damages or if guests on your property are injured, some policies cover those instances as well.

What Does Homeowners Insurance Cover?

Standard homeowners insurance policies cover the house and the items inside in case they are damaged or destroyed in a disaster such as a fire or a natural event like a major storm. Your coverage package also typically covers your liability, or legal responsibility, for damages or injuries others suffer on your property.

There are different types of policies for condos and mobile homes, but the types of homeowners insurance you will most likely be choosing from include HO:1, HO:2, HO:3, and HO:5. For first timers, HO:1 is the most affordable policy, but it is the most limited in the types of damages it covers, HO:2 is very similar to the first but covers a wider range of perils. HO:3 is often considered the best middle-ground for homeowners seeking adequate coverage for a moderate cost. Its exclusionary format lists what perils are not covered, as opposed to those that are. Finally, HO:5 is also an exclusionary style policy but covers more perils and comes at a higher cost.

What Events Are Not Covered by Homeowners Insurance?

The two major natural disasters that are not covered by insurance (but which some homeowners do encounter) are floods and earthquakes. If you do not live in an area where either of these events are common, you probably do not need any coverage. On the other hand, if you do need this coverage, there are separate policies available for both. In addition to this, you may need to add a modifier, or “rider” to your insurance policy to cover items you may own that are of particularly high value, such as expensive jewelry or electronics.

If you are moving into a new home, reach out to Certified Relocation Solutions today to discuss your needs.

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