What Homeowners Coverage is Right for You?

Enjoy full peace of mind with proper insurance 

Two types of property insurance are available to home owners. They are known as Named Causes of Loss and Risks of Physical Loss:

Homeowners insurance classified as Named Causes of Loss outlines specifically which causes of property loss are covered. The burden of proof of what caused the loss is on the policy owner.

Risk of Physical Loss home insurance policies cover loss of causes of loss, with some exclusions.
With both types of home insurance, you may need additional coverage for types of loss or certain belongings.

Cash-value policies

Cash value policies may offer you a lower premium, but they may not provide enough to replace your entire house or your belongings. A cash-value policy entails a room-by-room inventory of your belongings, and considers depreciation.

When shopping for homeowners insurance, you have a lot to consider. While most homeowners insurance policies cover damage from things like fire, wind, hail, theft, accidental damage, burst pipes, and offer protection for personal liability, there are some situations NOT covered. Most notably, these are occurrences of flood and earthquakes.

Fully protect yourself

To insure your home against such situations properly, separate home insurance policies should be purchased. If you live near water or live in a low-lying area where water drains or collects, flood insurance is a necessity. The significance of this is paramount, as evidenced in the aftermath of Hurricane Katrina.

Floods happen everywhere

After the storm season of 2005, some people thought their homeowners insurance covered their houses against the effects of the hurricane. Indeed, they might have been covered against the wind and flying debris, but NOT against the flood waters that came with it.

Earthquakes happen without warning

Unlike flooding, hurricanes or tornadoes, earthquakes happen suddenly and without warning. In America, when one thinks of earthquakes, the state of California comes to mind. The San Andreas Fault runs through about 85 percent of the western edge of California. In 1989, the Bay Area of San Francisco was rocked with a mid-to-major earthquake that measured 7.1 on the Richter scale. And, the US Geological Survey warns another major earthquake is likely soon in California. If you live in California or Alaska, homeowners insurance may not cover against earthquakes.

Consider insurance costs when buying your home

In addition to considering the risks of the geography where a potential home might be, you should also consider the cost of insuring the home. This can affect your pricing and what you can afford. As a rule of thumb, you should always insure your home for at least 100 percent of its worth, including the contents inside. Of course, you should adjust your home's value and its contents for inflation every year if your policy does not automatically so do.

When you know how homeowners insurance works, you can make the best choice for your situation and budget.

More information on homeowners insurance