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TruMark Financial Blog
March 17, 2020

Homeowner’s insurance coverage options

You worked hard to purchase the house of your dreams and it is most likely your largest financial investment. If disaster strikes, you want to make sure you are adequately protected.  Losing all your belongings and a roof over your head due to a house fire is devastating. Imagine if a nor’easter roared into town and a tree fell on your roof leaving a gaping hole? No one likes to think about these disasters, but they do happen. Being properly insured helps ease the pain and protects the equity in your home.

One way to ensure that you’re protected against some of the most common risks is to purchase homeowners insurance. Homeowners insurance covers the repair or replacement of the structure of your house as well as the contents from fire, wind damage, hail, theft or vandalism. It also provides liability coverage if an individual is injured on your property.

About 75 percent of U.S. homeowners do not carry adequate insurance on their home (source: Keefer). Without homeowners insurance, if a water pipe breaks in your home and damages your hardwood floors and furniture, you would be responsible for paying for repairs. Going without homeowners insurance is a risk you don’t want to take.

Types of Coverage

When selecting a policy, there are some terms to understand to make sure you are purchasing the coverage you desire:

  • Replacement cost coverage: reconstructs your dwelling and replaces your items without deducting for appreciation
  • Actual cash value coverage: you would recover the cost to rebuild the structure of the house minus depreciation
  • Personal property: coverage for items such as clothing, furniture, books, and sentimental belongings
  • Loss of Use: reimburses you for hotels, meals, and other living expenses if your house is destroyed or damaged and you have to seek shelter. Most insurance companies pay up to a specific percentage of the coverage price.
  • Additional Coverages: Extra coverage that can be purchased to provide protection above and beyond that provided in the homeowners policy (e.g., a higher amount of coverage against the theft of jewelry). When such additional coverage is purchased, it becomes an endorsement or rider to the original policy.
  • Exclusions: Specific situations, conditions, or circumstances listed in the insurance policy as not covered. (Read this section carefully)

There are several different types of policies to protect your home and valuables. Do your homework, read the fine print, ask questions, and enlist the help of an insurance agent to find a policy that best suits your needs.

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