Homeowner’s insurance, or hazard insurance, provides protection from damage or loss of your home as well as limited liability coverage for anyone who has an accident on your property. But that may not be all the coverage you need.
Lenders require borrowers to escrow a year’s worth of policy payments for new loans and to maintain enough coverage to pay the mortgage off in case of a total loss. That keeps payments lower, but with building costs constantly rising, it’s wise to insure your home with a guaranteed replacement homeowner’s policy. Your home can be rebuilt to the same size and quality as before, no matter what the current cost for materials and labor.
A basic HO-1 policy will cover fire, lightening strikes, explosions, vandalism, theft, and limited liability, but it doesn’t cover personal possessions. The HO-3 provides comprehensive coverage, including loss or damage to personal property. Be sure to purchase insurance riders for valuables such as heirlooms, jewelry, antiques, fine art, and rare collections.
If you live in an area prone to hurricanes or earthquakes, coverage must be purchased through riders at additional cost. Consider flood insurance for natural disasters where water can breach the home from outside. Your insurance won’t cover any roof with more than two layers, so repair or replace your roof to meet current building codes.
You want to save money by choosing a higher deductible or combine your homeowner’s insurance with your car insurance. Many insurance carriers will lower premiums for multiple products.