The Cost of Home Insurance – What It Covers, What It Doesn’t
Insuring a home is serious business. If you have a home to insure, then finding adequate protection for your investment is just as important as finding the right home in the first place. But finding the right insurance policy for your home starts with understanding what the cost of home insurance really covers. By understanding what’s covered in your insurance policy, you’ll have a much better idea of what you really need as well as what you can afford. And by knowing what you’re really paying for, you can be sure to get the policy that includes everything you need.
The most obvious feature covered in the cost of home insurance is the cost to rebuild or repair your home in case it should be destroyed or damaged. The main purpose of getting home insurance in the first place is to make sure that losing your home doesn’t ruin you financially. Just because your home gets destroyed doesn’t mean that you get to stop making mortgage payments. Losing your home means that you’ll have to keep paying your old mortgage, even as you look for a new place to live. And since many people are already paying as much as they can afford on their mortgages, this might mean having to default on their mortgages.
While most people understand that the cost of their homes are covered by the cost of home insurance, shockingly few people understand that they’re also paying to insure some of their possessions as well. Most policies include anywhere from fifty to seventy-five percent of the value of your possessions, but this only goes for the possessions that you declare to your insurance company. If you fail to let your insurance company know how much your possessions are worth, then you won’t get the full value of the possessions you lose when something happens to your home.
But you also need to understand what the cost of home insurance doesn’t cover. While most policies cover the most common “major perils” such as fires, storms, and accidents, they usually don’t cover events such as floods, earthquakes, and damage caused by war or nuclear accident. On the eastern seaboard, hurricanes are also often excluded, as are tornadoes in certain parts of the Midwest. But by understanding what’s covered and what isn’t, you can know exactly what you’re getting and plan accordingly. It’s knowing that you’ll be taken care of, even in case of the worst-case scenario, can give you an added bonus: peace of mind.