Property insurance is usually part of a family’s insurance portfolio. The homeowner’s policy has been around for a long time and is purchased every time a family buys a new home. Home insurance is a very comprehensive cover, but it is often misunderstood.
The typical homeowner always has some maintenance issues. These types of problems are sometimes presented as home insurance claims. This is where the misunderstanding begins. Homeowners insurance protects you from damages caused by risks.
Your home insurance does not cover maintenance and wear and tear issues. In this case, it will be very expensive to insure the contents of your home.
- Insured perils – fire or lightning, storm or hail, explosion, riot and civil disorder, aircraft, smoke, sabotage, theft, falling objects, the weight of ice and snow, accidental release of water or steam, freezing, volcanic eruption, and more. These are the basic risks covered by most family policies.
Homeowners Policy Structure
- Section A – Apartment – includes the apartment and all attached buildings.
- Section B – Other Structures – Provides protection for free-standing structures such as garages, storage sheds, flagpoles, fences, and swimming pools.
- Section C – Personal Property – Personal Property provides coverage for the insured’s personal property anywhere in the world. There are restrictions on certain types of personal property
- Section D Loss of Use This coverage relates to additional living expenses incurred by the insured if the home becomes uninhabitable due to a covered risk.
Risks and policy structure are the main points to consider when purchasing a homeowner’s policy. Replacement cost versus actual present value is the next consideration. These are the two methods that insurance companies use to settle claims.
The present value method rebuilds your home or replaces your property by taking the replacement value and deducting depreciation. Replacement cost replaces your home or personal property with materials of the same type and quality without depreciation.