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What is Homeowners Insurance?

Most homeowners can tell you what they pay each year for home insurance, however many draw a blank when asked, What does your home insurance policy actually cover in the event of a loss?

Generally, there are several perils (causes of loss) that are covered in a standard home insurance policy (HO-3). Some of the perils include fire, smoke damage, theft and vandalism. Home Insurance policies often separate coverage limits for these perils into categories, including:

Dwelling: This coverage limit of the homeowners insurance policy is the maximum amount available to the insured to rebuild the house itself and attached structures if the home is affected by a covered peril
Personal Property: Can include things like your furniture, clothing and other personal belongings.

Separate Structures: This can include a detached garage, shed and fences.
Loss of Use: If the home is affected by a covered peril, this coverage may allow the homeowner to rent elsewhere while their home is uninhabitable.
Personal Liability: This liability is intended to cover some bodily injury claims that the insured is legally liable for. A common example would be a trip and fall lawsuit on the insured property.

This summary is for informational purposes only. All coverages are subject to term, conditions, limitations, and exclusions of your actual policy. Read your insurance policy carefully to see what is actually covered. The policy will supersede any other information.
Now that you have a simplified rundown of the major perils and coverages available, here are some questions to consider:

  • Do I have enough home insurance coverage to rebuild my home in case of a total loss?
  • According to a national survey, more than two-thirds of homeowners are underinsured by an average of 18%.
  • Am I covered for Earthquake or Flood?
  • Homeowners insurance in California excludes coverage for earthquake and flood. If coverage is desired, a separate policy for each should be considered.
  • Where can I get homeowners insurance?

Contact an insurance broker with experience and knowledge of your area. An annual home insurance review can not only help to reduce current costs by comparing insurance quotes from a competitive insurance company and finding discounts; but by mitigating potentially catastrophic future costs by assessing and addressing coverage concerns and gaps.

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