Home Insurance Guide: The Basics

March 15, 2022

Written by Justin Sloan

What is home insurance? Put simply; home insurance is a policy to protect your house and its contents from damage and the cost of replacing them. Home insurance can vary depending on the insurance services, but those that apply to most people include cover for loss or damage to property and possessions in the home, cover for legal liability, and cover for additional living expenses if you can’t live in your property because of damage or loss.

Home insurance can be complicated and confusing. There are many different types of home insurance to choose from, and it can be hard to understand what they all cover. This guide helps you understand the home insurance process, how it works, and the different types of policies that you should be looking at.

How Does Home Insurance Work? 

Home insurance is a policy that covers your house and its contents in the event of damage or loss. Your insurer will assess the risk of damage to your property and possessions and then offer you a policy that matches that risk. The cost of the policy will depend on various factors, such as where you live, the age of your home, and the type of cover you choose.

While it’s possible to get a basic policy that only covers the structure of your house, most home insurance policies also offer cover for loss or damage to items in your property and personal liability. If you have high-value possessions such as fine art and jewelry, you may need additional coverage for these. But no matter what type of policy you choose, there will be some exclusions.

What’s Involved with Getting Home Insurance?

There are three main steps: choosing a policy, buying it, and claiming if something happens. When choosing a policy, it’s important to understand what’s covered and what isn’t. Check the small print, so you know exactly what you’re signing up for. It’s also a good idea to read the insurance company’s complaints procedure – you don’t want your claim rejected because you didn’t follow their rules.

Once you’ve chosen a policy, it’s time to buy it. You’ll need to provide details such as your address and postcode so that they can calculate an accurate quote based on the area you live in. If possible, try not to leave any gaps between moving out of one house or apartment and into another – insurers may view this as high-risk behavior and charge accordingly.

Is Home Insurance Required? 

Although home insurance isn’t obligatory, when you buy a house and have a mortgage, the lender will require you to have homeowners’ insurance in place before closing on the mortgage. You’ll need to provide proof of coverage and keep your policy active for as long as you have an outstanding loan balance. 

What’s Included in Homeowners Insurance?

Most policies include coverage for losses due to fire, vandalism, theft, water damage, and other natural disasters. Many policies also cover personal liability if someone is injured on your property. Some insurers offer additional living expenses coverage if you have to leave your home because it’s uninhabitable.

The majority of homeowner’s insurance policies cover six distinct categories of protection:

Dwelling (or structure)

Dwelling protects the physical structure of your home, including the roof and walls. The coverage amount should be equal to your home’s replacement cost (not market value).

Personal Property

Covers items in your residence that are not attached to it, such as furniture, clothing, or electronics. Generally, this covers up to 50% of the limit on dwelling coverage. Extra coverage can be purchased for high-value items like jewelry or artwork; these will need an appraisal first.

Liability Protection

Pays for bodily injury claims against you if someone is hurt while on your property or injured by something you did. It also pays for damage done by you or your family members to other people’s property.

Medical Payments 

It covers the cost of medical care for guests who are hurt while on your property, regardless of fault.

Additional Living Expenses

Pays for increased living expenses if you have to live elsewhere due to a covered loss (like fire). It also pays for any necessary equipment that makes temporary housing more livable, like an air conditioner.

Inflation Guard Endorsement 

Adjusts the coverage levels on dwelling and personal property limits based on changes in inflation and building costs over time. This is generally optional but highly recommended, particularly if you pay monthly premiums instead of making annual payments upfront (monthly premiums increase each year automatically in most cases because they’re tied to the Consumer Price Index).

What Isn’t Included In Homeowners Insurance? 

Homeowners insurance usually doesn’t cover natural disasters such as floods and earthquakes. If you live in an area at risk of these, you will need to purchase additional coverage. The policy may also not cover damage caused by neglect or failure to maintain the property or events that are considered intentional.

What Should I Look For When Buying Homeowners Insurance?

When choosing a homeowners insurance policy, it’s important to understand what’s covered and what isn’t. Check the fine, so you know exactly what you’re signing up for. It’s also a good idea to read the insurance company’s complaints procedure – you don’t want your claim rejected because you didn’t follow their rules. 

What Are The Different Types Of Home Insurance?

There are three main types of home insurance: standard, replacement cost, and actual cash value. Replacement cost policies pay for rebuilding or repairing without any depreciation deduction. Actual cash value policies pay to replace items at today’s prices after deducting depreciation from their original values. 

Standard policies include coverage against fire, windstorms, and other hazards but not flood damage unless specifically requested; this option costs more than basic coverage.

What Should I Do If I Have To Make A Claim?

Call your local insurance agent within business hours, as soon as possible, and they will walk you through the process. You can always get help when you need it. Be sure to take pictures of the damage for your records and keep all receipts related to the damages.

Is There Anything I Should Know About My Homeowners Policy?

Yes! Be sure to read through your policy carefully to understand what isn’t covered. Also, keep in mind that policies have limits on how much they will payout for a single event. If you have particularly valuable items like jewelry or collectibles, you may want to consider purchasing additional coverage.

Your homeowners’ policy may also include coverage for additional living expenses in the event that you can’t live in your home due to a covered loss. This could help pay for things like hotel stays or restaurant meals while your home is being repaired.

Finally, remember that you should always contact your insurance services as soon as possible after any type of loss or damage occurs so they can begin the claims process.

What Is The Difference Between Homeowners Insurance And Renters Insurance?

Renters insurance is an insurance policy that gives some of the protections available through homeowners insurance. Still, it does not cover the house or building (with the exception of minor modifications made by a tenant) – it only covers the tenant’s possessions. On the other hand, homeowners insurance protects both the structure of your home and your possessions inside it. 

How to Choose the Right Home Insurance Policy

When choosing a home insurance policy, it’s important to think about what you need and what you can afford. You don’t want to be underinsured, but you also don’t want to pay for coverage that you don’t need.

Here are some things to keep in mind when choosing a policy:

  • The age of your home – If your home is old, it may not be as structurally sound as a newer one, so you may need more cover.
  • Location – If you live in an area with high crime rates or that is prone to natural disasters, you will need higher levels of coverage.
  • Type of property – If you own a property used for business purposes, you will need specific cover.
  • Possessions – The more valuable your possessions are, the more likely it is that you will need additional coverage.
  • Additional expenses – Some policies include extras like emergency home repair or temporary accommodation in the event of an evacuation.

Deductibles

Most homeowners insurance policies have a deductible, which is an amount that you will need to pay towards the cost of any claim. The higher your deductible, the lower your premium will be. However, if you make a claim and it’s less than the deductible amount, you won’t receive any money back from your insurer.

Insurance Services in Connecticut

There are a lot of factors to consider when selecting home insurance. At Nesso Insurance, we want to make the process as smooth as possible. Our goal is to provide high-quality coverage to fit your needs. 

Our experts at Nesso Group will gather all the necessary information to assess risk, identify coverage gaps and offer you an accurate quote, so you have all the information before making your decision. Don’t hesitate to contact us now to get started. 

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