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Home Finance
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Home Insurance Guide

 If a homeowner should suffer any home related loss, there’s a policy that’s been put in place to provide him/her with financial compensation. This insurance policy is known as the homeowner’s insurance policy. The policy pays for legal costs and all kinds of destruction or damage to the home. So if someone got injured on your property and sues, or the content and structure of your home got destroyed, the home insurance policy would pay for it all. Hence, all homeowners need the homeowner’s insurance. You may need a home insurance guide to help you, but below are some things to know about it. What does homeowner’s insurance cover? Typically, homeowner’s policies cover part or all of the below-listed areas, but vary on how much and on what they cover. The areas are: The home, with the inclusion of the central air and heat systems, electrical wiring, plumbing and of course, the structure. Structures like fences or sheds on the property. Clothes, appliances, electronics and other possessions in the home including those not located on the property. Medical payment for anyone who got hurt on your property. Financial losses (personal liability) in cases where someone sued you because he/she got hurt on your property. Hotel room payment while your home is being fixed and other loss of use. What type of policy should you get? There are several different kinds of policies to get. These policies range from a HO-1 to a HO-8 policy. Owners of single-family homes are advised to get a HO-3 policy as it covers most hazards to your home and is fairly comprehensive. Hazards like theft, wind and fire are covered but it excludes nuclear accidents, war, earthquake and flood. HO-3 also provides liability coverage. HO-4 is for renters and tenants while HO-1 and HO-2 cover less. How much homeowners insurance do you need? When figuring out the details of your policy, there are a number of things to consider. To begin, you would want to purchase enough insurance to ideally cover 100% of what it would cost to rebuild if your home got destroyed. The options include an “actual cash value” policy option where you are paid the worth of the property as at the time of destruction, less depreciation, a “replacement cost” option in which depreciation isn’t factored in, and an “extended value” option which pays you up to 30% above the limit of your policy. This means for a $100,000 policy you may get up to $130,000 coverage because it’s designed to cover unexpected happenings like sudden hikes in the cost of construction as a result of storm damage. It is advised that you opt in for the more comprehensive option so that your rebuilding cost will be covered 100%. Secondly, make an inventory of your home’s contents and consider this in determining how much insurance you’ll need. The insurance institute’s website can help you with the inventory. It’s better to go for a more comprehensive option that will enable you buy everything you own than to go for an “actual cash value” option. Consider your financial assets e.g. investments, retirement accounts, your home and all that’s worth money and ensure your home insurance policy has enough liability coverage for them. As earlier stated, you will be able to make better choices with a home insurance guide. i
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© 2010 Home Buyer
Home Finance

Home Insurance Guide

 If a homeowner should suffer any home related loss, there’s a policy that’s been put in place to provide him/her with financial compensation. This insurance policy is known as the homeowner’s insurance policy. The policy pays for legal costs and all kinds of destruction or damage to the home. So if someone got injured on your property and sues, or the content and structure of your home got destroyed, the home insurance policy would pay for it all. Hence, all homeowners need the homeowner’s insurance. You may need a home insurance guide to help you, but below are some things to know about it. What does homeowner’s insurance cover? Typically, homeowner’s policies cover part or all of the below-listed areas, but vary on how much and on what they cover. The areas are: The home, with the inclusion of the central air and heat systems, electrical wiring, plumbing and of course, the structure. Structures like fences or sheds on the property. Clothes, appliances, electronics and other possessions in the home including those not located on the property. Medical payment for anyone who got hurt on your property. Financial losses (personal liability) in cases where someone sued you because he/she got hurt on your property. Hotel room payment while your home is being fixed and other loss of use. What type of policy should you get? There are several different kinds of policies to get. These policies range from a HO-1 to a HO-8 policy. Owners of single-family homes are advised to get a HO-3 policy as it covers most hazards to your home and is fairly comprehensive. Hazards like theft, wind and fire are covered but it excludes nuclear accidents, war, earthquake and flood. HO-3 also provides liability coverage. HO-4 is for renters and tenants while HO-1 and HO-2 cover less. How much homeowners insurance do you need? When figuring out the details of your policy, there are a number of things to consider. To begin, you would want to purchase enough insurance to ideally cover 100% of what it would cost to rebuild if your home got destroyed. The options include an “actual cash value” policy option where you are paid the worth of the property as at the time of destruction, less depreciation, a “replacement cost” option in which depreciation isn’t factored in, and an “extended value” option which pays you up to 30% above the limit of your policy. This means for a $100,000 policy you may get up to $130,000 coverage because it’s designed to cover unexpected happenings like sudden hikes in the cost of construction as a result of storm damage. It is advised that you opt in for the more comprehensive option so that your rebuilding cost will be covered 100%. Secondly, make an inventory of your home’s contents and consider this in determining how much insurance you’ll need. The insurance institute’s website can help you with the inventory. It’s better to go for a more comprehensive option that will enable you buy everything you own than to go for an “actual cash value” option. Consider your financial assets e.g. investments, retirement accounts, your home and all that’s worth money and ensure your home insurance policy has enough liability coverage for them. As earlier stated, you will be able to make better choices with a home insurance guide.
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