Homeowner’s Insurance 101: Your Guide to Understanding Your Home Insurance Policy

November 16, 2021
8:00 am

Your home is one of the most important investments you’ll ever make, which is why you’ll want to safeguard it, as well as the valuables within, with the right homeowner’s insurance. You’ll want a policy that covers the cost of rebuilding your house, as well as the cost of replacing your personal items. If you got a mortgage to purchase your new home, you would be required to produce proof of insurance before or at the closing. 

Here are some phrases you will see in an insurance policy that might be unfamiliar: 

Additional Living Expenses: Covers the additional costs of living incurred by a policyholder should they be temporarily displaced from their place of residence.

Contents Coverage: Also known as personal property insurance, it can help you replace the items in your home if you have a theft, fire, or other types of insured claim or loss.

Deductible: In the event of a claim, a homeowners insurance deductible is the out-of-pocket amount that you are responsible for paying before your insurer will payout.

Disasters Coverage: While the damage caused by most disasters is covered in a standard homeowner’s policy, it is important to know that floods and earthquakes are excluded. For flood coverage, you will need to purchase a separate flood insurance policy. However, earthquake coverage can be added to your homeowner’s insurance policy with an endorsement.

Dwelling: Your home and the structures attached to it (garage, attached deck, etc.) 

Liability Coverage: The personal liability portion of your homeowner’s insurance policy covers you against lawsuits for injury or property damage that you (or family members or pets) cause to other people.

Named Insured: This is the person responsible for the insurance policy, who is living in the home and taking care of it. 

Other Structures: Other structures on your property that are not attached to the home but you want to protect.

Owner: The person named on the most recently recorded deed to the property.

Premium: The cost of your insurance, typically discussed in terms of one-year terms.

Replacement Cost or Actual Cash Value (ACV): Replacement Cost coverage provides you with the coverage to replace what you lost, minus your deductible. Whereas, Actual Cash Value coverage provides you with the coverage to replace what you lost, minus your deductible and depreciation. Replacement cost usually provides you with more coverage.

Umbrella Liability Coverage: Provides protection that’s over and above the limits of liability on all your personal exposures, such as your home, rental property, car, watercraft, or recreational vehicle.

Vacant Property: If your home is vacant due to a move or new construction for 30 days or more, important coverages begin to be excluded. After 60 days, those coverages plus fire become excluded. If you plan on leaving your home for an extended period of time, contact your insurance agent.

When reviewing your homeowner’s insurance, it is important to remember that insurance isn’t just to protect your possessions. Insurance gives you peace of mind. When choosing a provider, choose one that values your business. This peace of mind is why Fathom Holdings acquired Dagley Insurance. Dagley understands what homeowners worry about and structures their policies to match. Moreover, at Dagley, it is about more than insurance. It is about building lasting relationships through unmatched customer service and care.

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