Homeowners Policies: Cost, Coverage Options, & More

Our homes represent some of, if not the largest, investments we will make in our lifetimes. Homeowners insurance is designed to protect our investments, providing coverages for financial losses arising from certain disasters, property damage, and liability issues. Most people understand that homeowners insurance is an important part of home ownership, and in many cases is required by the banks that issue mortgages.

Fewer people understand the major components of a typical homeowners policy, however. In this guide, we will break down the common parts of such policies, helping you to understand what they are and what they are designed to cover.

Homeowners Policies – The Basics

The typical homeowners’ insurance policy is one comprised of several major components. Each part is designed to work together to provide financial protection from the events or situations that may lead to property damage or loss. Many may also provide protection in cases of liability, such as when someone is injured on the property.

A number of factors go into establishing a homeowners insurance policy and the annual premium of the policy. These may include:

1. The home’s features, such as its age, size, wiring, and type of structure(s).
2. The home’s location, particularly regarding crime rates, access to emergency services, and exposure to severe weather conditions.
Claims history.
3. Protective devices installed in and around the home, such as burglar alarms, fire suppression systems, deadbolt security, and smoke/carbon monoxide detectors.
4. Personal factors such as credit histories or the presence/absence of certain health and lifestyle conditions.

Typical Homeowners Insurance Coverage

Most homeowners insurance policies are designed to provide comprehensive coverage of the home, its contents, and the people residing in or visiting the property.

The primary part of coverage is financial protection from loss or damage of the structure itself. This area of insurance coverage is designed to provide money if the home is damaged due to fires, certain natural disasters, or catastrophic conditions outside the control of the homeowner. Usually, natural disasters like earthquakes and flooding are not covered under the homeowners’ policy, but supplemental coverage is available to cover these disasters.

The next largest portion of coverage concerns the home’s contents, including furnishings, electronics, personal items, and certain collectibles. High-value items – firearms, valuable antiques, artworks, etc. — may need supplemental coverage in the form of a rider or separate insurance policy.

Liability coverage is an additional feature of most homeowners policies. This area of coverage is designed to protect the homeowner from financial losses associated with injury or property damage caused by the homeowner or resident to another person. Some policies also contain coverage for household pets, particularly against damage or injury they may cause to others.

Finally, many homeowners policies may provide financial compensation for the home’s residents if they are displaced from the home due to disaster. This coverage is designed to provide living expenses if the home cannot be occupied for a period of time.

Speak to your insurance agent for more details on the types and prices of homeowners insurance. With the help of an experienced insurance agent, you will be able to find the right policy that provides the protection you need for your home. Or, get an instant quote from our experts.

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