Your home is a valuable asset that needs property and liability protection. Many incidents that you may not expect can pose a threat to your home, so it's best to have an insurance policy for it.  

Homeowners' insurance protects a single residential property or in some cases, multiple properties. It' s a plan that helps a homeowner cope with incidents that affect the home, such as theft and damage to the inside & outside area of a home. It also protects your belongings while you are out of the house, like in your car or traveling in your suitcase.

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Homeowners insurance can repair your home, replace lost or stolen items in or out of the home, or cover costs if you injure someone on your property. It's often required by lenders if you have a mortgage, but is a necessity if you invest any funds into your home. Don't think you are being wasteful or spending on unimportant things when you buy homeowners insurance, it's one of the most used insurance policies and has an incredible amount of value.

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The limits of your policy are often overlooked when thinking about the cost of insurance, so make sure you discuss the details with your insurance advisor. Things like the replacement value, reconstruction costs, water & back up limits, and liability limits are very important to consider.

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Condo Insurance Vs. Home Insurance

If you own a condo or a free-standing home, you are a property owner, but there are certain differences when it comes to insurance. A condominium is usually a unit next to or surrounded by other units, while a home is free-standing ( standing alone). A condo owner has to share the exterior of the house with other condo owners. However, a house owner has control over the interior and exterior of the house.

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When it comes to insurance, a condo usually has some insurance purchased by the condo association, and the owner may buy other insurance (ie. "walls in"). But a house owner has to buy full insurance covering the main structure, and other buildings.

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Liability is similar with a condo and home insurance policy.

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Homeowner insurance covers many things.  Let's look at a few and see how they benefit you.

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Dwelling

This insurance takes care of damages to the home and buildings attached to it. If repair is not possible, your home will be rebuilt. If a building is not attached to the main building, then only 10% of the dwelling coverage is used.

Note:  The limit of your dwelling is the cost to replace your building (debris removal, construction, etc.)

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Personal Belongings

Depending on the situation, your personal belongings or equipment will be repaired if possible. If repair is not possible such as when they're stolen, then the items are replaced. The amount covered is usually 50%to 70% of the dwelling coverage.

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Temporary Home Expenses

If the damage to the home can be repaired, then the insurance will pay for a temporary home. The owner will stay in this home till the repair is completed. This can be 20% of the dwelling coverage or more.  

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Liability

It can pay up to $100,000 or more if you injure any on your property. This can also include the cost of medical bills to treat someone injured on your property.

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A high quality insurance company typically includes a package, with numerous lines of coverages. Your insurance advisor will analyze your home, property, and lifestyle to determine the best policy.

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The valuation of a home is commonly overlooked. It's the figure an insurance company refers to when reimbursing property damage.

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Actual Cash Value

An actual value means the insurance will pay the cost of any damaged belongings without removing the depreciation value. It's used mostly for things in the home, not the building itself (structures should be replacement value).

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Replacement Value

As for replacement value, it pays for the necessary material to repair any damage without deducting for deprecation. However, it won't pay out more than what the coverage can carry. With an extended replacement cost value, more can be paid to give a home the best repair. This type of replacement can cover up to 25% more than the cost of the coverage.

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Put simply, if your home is valued on actual cash value terms, then it factors in depreciation at the loss. If it's on replacement value then it does not factor in depreciation.

A couple of things are not covered by the homeowners' insurance. Some include:

• Specific Natural Disasters (earthquake, wind, flood)
• Damage caused by war
• Damage caused by government action
• Damage caused by a neglected breakdown
• Business Operations and Property (unless added by endorsement)

You can buy additional insurance to cover some of these uncovered cases or incidents.

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If you own a home or condo, an insurance policy is a wise investment. Every homeowner should keep in mind that fire accidents, theft, and vandalism can happen at any time. An insurance policy will protect your from these situations and take are of payments if the unfortunate happens.

If you rent or own an apartment, condo, or house, then you should probably consider home insurance.

The cost of homeowners insurance is different depending on many things. The location of your home, the cost to rebuild, and the personal belonging you own will determine the price of insurance. The average amount paid for homeowners insurance is about $1500 per year. Some larger homes, especially near fire, hurricane, or flood zones, can we over $10,000 a year.

Coverage can also cost more depending on the insurer, so you can do well to compare prices and what is included in the policy.

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If you live in coastal states like Florida, New York, and California, then you should expect to pay much more. You may need to get a separate insurance policy covering hurricanes, earthquakes, and fire.

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