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Home insurance isn’t an option — it’s a necessity. Nearly all mortgage lenders require borrowers to purchase homeowners insurance before financing a residential real estate transaction.
FOX Business | By Josephine Nesbit | Published April 27, 2021 3:23 pm EDT
Insurance can be complicated. Homeowners need to be prepared and make sure they are adequately insured. Here’s a buyer’s guide for first-time homeowners on the basics of home insurance and finding the plan that offers the right insurance coverage for you.
What should I look for when buying home insurance?
Buyers can adjust their insurance policy to fit their insurance coverage needs. When buying homeowners insurance, you should have enough coverage to:
- Rebuild your home
- Replace your personal belongings
- Cover injuries and damages that occur on your property
- Pay your living expenses if your house is uninhabitable
What does home insurance cover?
Here are the different types of coverage from a standard home insurance policy:
1. Dwelling
Dwelling coverage helps rebuild or repair the home’s structure if damaged by a covered event. Dwelling coverage should equal the cost to replace your home. This can be calculated by speaking with an insurance agent or an appraiser.
2. Personal property
This applies to everything in your home besides the structure itself if your personal belongings are destroyed, vandalized, or stolen.
You should have enough coverage to replace all of your belongings. This can be calculated by keeping a home inventory of everything you own and their actual cash value. More expensive items may also require additional coverage.
3. Liability
Liability coverage covers you against lawsuits for injury or property damage caused by you, family members, or pets to other people. Common liability claims include:
- Dog bites
- Intoxicated guests
- Accidents
- Falling trees
- Injured domestic workers
No-fault medical coverage is also included. This covers the medical expenses of guests injured on your property.
4. Additional living expenses
If your home is uninhabitable, additional living expenses will cover your temporary displacement such as hotel bills and eating out.
There are also different types of homeowners insurance for various property types and insurance coverage needs. This includes:
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