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Insurance
Homeowner's Insurance |
The main purpose of
homeowner's insurance is to protect your home and your personal property against major
events such as fires, floods, or theft. Homeowner's insurance also provides liability
coverage to protect you from being sued if someone gets injured on your property. Most
lenders require you to have a homeowner's policy in place when you purchase a home.
A basic homeowner's policy should cover your home against the following perils:
- Fire or lightning.
- Windstorm or hail.
- Explosion.
- Vandalism.
- Theft.
- Riot or civil commotion.
- Falling objects.
- Volcanic eruption.
- Freezing or accidental
overflow of water from pipes.
The Three Parts
Every policy is different. But you can expect a standard homeowner's policy to consist of
three basic parts. Coverage for the dwelling, personal property coverage, and liability
insurance. There are also several types of additional insurance you can buy that are not
covered by a homeowner's policy. They include flood, earthquake, or hurricane coverage.
You need a separate policy for these types of coverage.
The Basic Three:
1) Dwelling Coverage
You should have enough insurance to rebuild your home at today's prices -- not your home's
original cost. Make sure your policy includes a replacement cost provision that
specifically addresses this concern.
Use an inspector or appraiser to determine the value of your home. Don't rely on questions
from your insurer. Once you have an accurate number, insure your home for 100% of its
replacement value.
If you're unsure about you property's value, you have the option of buying excess dwelling
coverage. This coverage ensures your home will be protected for an amount over 100% of the
replacement value (normally 120%).
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