Buying a home is a big purchase, making it especially important to protect your financial investment. Homeowners’ insurance is the best way to mitigate the financial losses occurring after the unthinkable happens. But to make sure you’re getting the policy that works best for you, take the time to learn about what makes up an insurance policy, what the various terms in a policy mean, as well as what is generally covered in a homeowners’ insurance policy.
First things first, what is homeowners’ insurance?
Homeowners’ insurance, or home insurance, is a coverage policy that when purchased provides the homeowner protection across a variety of situations. While the specifics of what is covered is dependent on the policy you purchase, policies will typically include dwelling, personal property, as well as liability coverage.
At times, you might see home insurance policies referenced as HO-1 through HO-8, which are common labels for the different levels of policies and coverage. HO-3 is considered the most common type of homeowners’ insurance, and will generally provide suitable coverage for most people, with HO-8 being the most comprehensive coverage. However, when searching for your policy it is important to review the different levels of coverage and decide which is best for your needs and situation.
What type of coverage may be included in your policy?
While you should always read your policy to confirm the specifics of your coverage, it’s good to have an idea of what kind of protection options are available when you are shopping for a policy. The types of coverage that are considered standard are:
This type of coverage is to protect the physical structure of your home, normally in instances such as fire, lightning or wind damage. Keep in mind this coverage pertains to structures that are attached to your home, and therefore a detached garage or shed may not be covered.
Personal Property Coverage…
…for personal property is extended to your belongings (which may include clothing, electronics and furniture) in the event that they are lost or damaged. At times this type of coverage may apply even if the item is not on your property, such as items kept in a storage unit.
With this kind of protection, it’s possible you may see references to reimbursement of actual cash value or replacement cost coverage.
Actual cash value is the cost of replacing your belongings with depreciation of value being taken into consideration. Replacement cost coverage covers the expense of buying items of the same type (and with that, same quality) when you make your claim.
With liability protection, you may receive coverage if you or a family member are sued for damages or injury, such as someone being injured in your home and finding you at fault. Liability protection can offer some coverage for the legal fees incurred after being found legally responsible.
Also sometimes referred to as guest medical protection, this coverage extends to the medical expenses incurred if someone is injured on your property.
So how much does homeowners’ insurance cost?
The cost of your policy is going to be based on a lot of things including but not limited to: your deductible (or amount you have to pay out of pocket for claims), location of your home (based on risk factors specific to that region), materials your home is made out of, as well as the age of your home.
Make sure that when shopping for any type of insurance you receive multiple quotes and read the coverage details carefully to determine the best option for you.
While it’s not a requirement to have a policy providing coverage for your home in Nevada, keep in mind that some mortgage lenders may require the purchase of a policy as a condition for extending the loan. For this reason, and to educate consumers, the Nevada Department of Business and Industry (Division of Insurance) has provided a comprehensive guide to home insurance.