Your home will most likely be one of the biggest purchases that you ever make, and that is why you want to be absolutely sure that you have the right insurance policy. Your homeowners insurance will be your first line of defense against a myriad of risks in the coming years. If you plan on buying a home in the near future, then you need to start exploring your insurance options as soon as possible.
Basic Coverage for Your Home
The average home insurance policy covers common perils such as theft, vandalism, and fire damage. It will also help you cover some or all of the costs of any injuries that take place on your property. That includes injured guests as well as residents. When choosing a policy, you should make sure that your insurance is tailored to the local environment. Those who live close to the beach might need coverage for mudslides, but that type of insurance is going to be impractical if you live inland. As a general rule, you can add specific perils to any home insurance policy.
Property and Dwelling Protection
One of the most complicated aspects of homeowners insurance is the difference between dwelling protection and property protection. The actual structure of your home will only be protected if you have specifically added dwelling coverage. For the possessions inside your home, you will need property protection. Those who have multiple buildings on their land might need add-on coverage for standalone garages and sheds.
Cash Value vs. Replacement Cost
As you are crafting your policy, one of the biggest decisions you will have to make is if you would like cash value insurance or replacement cost coverage. With a cash value policy, you are awarded the current value of your home and the property inside. If the real estate market in your area has recently dived, then the policy itself might drop as well. That is why most homeowners choose replacement cost coverage. In the event of a major accident, you are going to receive enough financial assistance to rebuild the house and replace your possessions.