If you are a homeowner, then you know the importance of home insurance. It not only protects your home against damage and theft, but it also determines whether you will be eligible to a mortgage. Today virtually all mortgage lenders require borrowers to have insurance coverage for the full value of the property and won’t approve the mortgage without proof of it. If you have lived in a rental home before, then you are probably familiar with renters insurance. It is quite similar to home insurance on things such as personal property coverage. However, there is much more to home insurance because there is a lot a stake when you own a home. In this post, we will take you through essential elements to look for in any homeowner’s insurance coverage.
- Replacement and repair costs
Building coverage is divided into two categories. They include basic coverage that covers damages that results from natural disasters such as floods, hurricanes, earthquakes and much more as stipulated in your policy. The second category is the replacement and repair coverage which is the most critical for any homeowner. This type of coverage pays for total replacement or repair of a home in case it gets destroyed. Typically, replacement cost usually accounts for inflation and labor costs. Buy coverage that specifies replacement costs as opposed to the current market value of your home at the time of the claim. After a major disaster, the cost of materials and labor can skyrocket. It is, therefore, crucial to check if coverage covers replacement and repair cost. This will ensure that you don’t incur additional charges in case labor or cost of materials goes up.
- Liability
This is another crucial element to look for in home insurance coverage. Liability protects you in the event where someone gets injured on your property and demands compensation for medical costs incurred. Liability covers things like a tree falling on the neighbor’s property damaging it, someone slips and falls on your property, your dog biting someone and much more. Standard liability coverage usually ranges between $100,000 and $300,000. You can also buy more additional coverage or obtain a separate personal liability policy to protect your asset better in case of property damage or injuries experienced by someone else on your property.
- Contents of the home
When a disaster such as an earthquake, tsunami or hurricane strikes, it will damage not only the house but also its contents. So building a new shiny home and having nothing to fill it is not great. Most insurance companies offer a standard coverage of about 50%-75% of the total value of your belongings. This means that if you have $100,000 worth of possession, then you will have between $50,000 and $75,000 worth of coverage for your valuables. Some insurance companies cover expensive items like furs, jewelry and silverware but limit the extent of coverage. Before you choose home insurance Calgary, check if the policy for the content of the home is favorable.
- List of covered threats
The insurance policy should spell clearly which natural disasters and threats it covers. Common things covered include lightning, fire, hail, wind airplane or vehicle damage and falling objects. Some insurance companies require a rider for perils such as frozen water pipes and water overflows. Natural disasters such as hurricanes floods and earthquakes are usually not covered in the basic policy. This means that if you want them covered, then you must pay additional premiums. Before you make your final decision, check the list of covered threats on the insurance cover that you have chosen to see if it is satisfactory.