Home insurance is a necessity and oftentimes is neither an option nor a luxury. Nearly all mortgage lenders require you to have home insurance before agreeing to finance your home. The home protection plan protects your home and belongings against damage or a break-in where items are stolen. Even if it’s not your own home, you still need insurance to protect your items.
Getting your property and belongings insured can be a complicated process, especially if you don’t know where to start. But, as a homeowner, you need to make sure that your home is adequately insured. Here is a beginner’s guide to buying a home protection plan that outlines some of the basics of home insurance, what it entails and finding a plan that offers the right insurance coverage for you.
What does it cover?
Home protection plans cover various things which include
All the possessions in your home besides the structure in case they are destroyed, vandalized, or stolen. The coverage can be used to replace all of your belongings. Have an inventory of all your possessions and their actual cash value. Expensive belongings might require additional coverage.
Damage to your house (interior and exterior)
Damage caused by vandalism, fire, hurricanes, lightning, or other disasters can be covered. Your insurer might compensate you enabling you to repair or completely rebuild your house in such a case. However, damages from natural calamities like floods, earthquakes, landslides and other damages from things like poor maintenance, sewer backups, and expensive jewelry aren’t usually covered.
It’s therefore important to review your insurance coverage and check if there are any limitations. Freestanding garages and other structures on the property might also not be covered since they are separate from the main house.
Items like clothing, furniture, appliances, and most possessions in your home are covered if damaged in an insured disaster. Expensive appliances and system repairs in your home can be quite expensive to repair. But, with a home warranty plan that provides coverage for systems and appliances you are good to go. Buy a warranty to protect your home that is right for all your needs.
A dwelling coverage or dwelling insurance which is equal to the cost to replace your home helps pay for rebuilding or repair of a home’s structure if damaged by a covered event. The cost is calculated by an insurance agent or an appraiser after checking the extent of the damage.
Some home protection plans have a coverage for medical payments that caters for people who are injured while on your property regardless of who caused the injury. It’s an important plan that covers you from being sued for the cost of their medical treatment.
Liability coverage is somehow similar to medical coverage since it also covers you from being sued for injury or property damage which is either caused by you, family members, or pets to a visitor or other people. They include falling trees, injured visitors or domestic workers, intoxication or dog bites.
Types of home coverage
Home insurance coverage differs, with the least costly providing the least amount of coverage and the highest a bigger coverage. Each home coverage offers various levels of protection depending on the residence and a homeowner’s need. But in general, three levels of coverage are available from replacement cost, accrual cash value and guaranteed replacement cost/value.
Replacement cost: Replacement covers the actual cash value of your residence/house and assets without the deduction for depreciation. You can, therefore, repair or rebuild your home up to the original value.
Actual cash value: Actual cash value covers the cost of your residence/ house and your possessions after deducting depreciation. It all narrows down to the current worth of the possessions and not how much you paid for them.
Guaranteed (or extended) replacement cost/value: The policy pays for costs such as repair or remodeling costs of your home even if it’s more than your home protection plan’s limit.
What to do before buying a home protection plan
- Find out more about the policies available and decide on what type of policy you need to buy depending on your home and desired coverage.
- Check out different home insurance providers, reviews from previous clients and make a comparison of the offers available.
- Consider the different pricing and ask for a quote of the same level of coverage from each provider to help you narrow down the list.
- Once you’re convinced choose the best policy according to your needs and make the purchase.
A home protection plan through home insurance coverage is quite beneficial, but not everything can be covered. Evidently, buying a home protection plan isn’t as complicated as many think. Simply ensure that you shop for the plan earlier and ask questions before securing a policy.