Most people think of home insurance as only insuring the structure of a home. In most cases that is not true; home insurance is one of the most important policies you own as a homeowner. Home insurance will cover you against damage to your property, loss of personal property and also provide personal liability coverage for the insured. Most policies carry a deductible, so when shopping for insurance, be sure to not only compare the annual rate, but also the amount of your deductible.
In the case of damage to the property, you can choose to have replacement cost coverage or actual cash value coverage. Replacement cost covers the actual cost of the materials to repair or rebuild the damages with similar quality materials and without deducting for depreciation on the home. Actual cash value coverage is the cost of the materials to repair or rebuild the damages minus depreciation costs.
Something to be aware of is that not all damages are automatically covered by home insurance. Certain damages require additional addendums to be included on the policy. Most policies cover against fire, wind damage, hail and theft. Some damages that are not automatically covered include flood, mold and fungi. Always check with your insurance agent to see what damages may be covered and what may not be.
In the case of actual loss of the property, you can choose to have market value or replacement value coverage. A market value policy would only cover the house at what it is worth today if a loss were to occur. If the real estate market is down at the time, market value coverage can cause a hardship. Replacement cost coverage covers the expense of rebuilding the home using current construction costs.
There are also limitations for personal property within a home. For the most part, contents of a home are insured as well as the personal belongings of the insured and of the family members living in the home. Protection for personal property is also based on either replacement cost or actual cash value. There are certain items that do carry monetary limits as to what will be covered. An example of these items includes jewelry and artwork.
One other coverage to consider when shopping for home insurance is loss of use coverage. This coverage becomes important when you cannot live in your home due to damage or loss. This will cover expenses that extend over and beyond your normal living expenses.
All of these factors affect your home insurance decisions as well as the rates you will have to pay. If you do your research and compare rates from several agents, you are sure to get the best policy for your money.