Having home insurance is a necessity no homeowner can afford to shirk from. This is especially considering how unpredictable the world is, and how crises seem to be the norm, rather than the exception these days.
Your home could be impacted by storms, hurricanes, fire disasters, etc. “Insurance is the only way to recoup your losses when any of these events occur. Thus, if your home is not insured right now, you are quickly running out of time”, – says the head of mail order brides advisor service.
While some people understand the need for insurance, they do not know if their outbuildings can come under their home insurance plan. In this article, you will find the important things to take note of about home insurance policies. Furthermore, you will also find a detailed explanation of outbuildings and how they fit into your insurance plan.
Types of Homeowners Insurance Coverage
All insurance policies do not offer the same level of protection. You get charged different amounts for the different options. In the same way, you get different levels of protection for each. Do bear in mind that the lower the price is, the lower the protection you obtain from the plan.
In the United States, there are 3 basic levels of coverage
- Actual cash value
Here, the insurance covers the cost of the house plus any other valuables found within it. The value of the building and that of the properties are gotten after depreciation is deducted. Depreciation concerns how much the building and the properties are worth at the material time and not their worth at the time you purchased them.
- Replacement value
Here, the benefit is a little higher than that of the cash value option. Replacement value policies offer the actual cost of the property without giving room for depreciation. Hence, you will get the original value of the property, and can thus rebuild your home.
- Guaranteed replacement cost/value
As you’ll expect, the benefits here are higher than what you’ll obtain from a replacement value policy. Under this policy, you get the funds to repair and replace your home destroyed through whatever means. What is unique about this policy is that the funds you get in return might actually be greater than what your policy is worth. The insurance companies who offer this type of coverage offer what is known as an extended replacement. Typically, however, the extension is not more than 25% of the limit of your purchase.
What a Homeowner Insurance Plan Covers
There are some specific items that the average homeowner insurance plan covers. There might be slight variations depending on the insurance company, but they are mostly similar.
The first is damage to the building caused by fire outbreaks, hurricanes, lightning, or vandalism. Destruction caused by flood or negligence does not typically come under this coverage. You may have to take out a separate plan for that.
Also, you also get compensation for home possessions or valuables lost through the disaster.
You can also obtain liability coverage. This pays the cost of any injuries that happens to any person on your property. The person can claim compensation from the company as long as you are liable in some way for the injury.
Finally, you may want to get the additional living expenses plan. This covers the cost of your living expenses while your home is being rebuilt.
Outbuildings such as a detached garage, gazebo, guest house, fence, etc., typically come under the homeowner coverage. However, in some cases, that might not be so. Thus, the first thing you want to do is confirm the limit of your homeowner’s insurance. You can simply contact your insurance company to verify this.
Additionally, if you purchase or build some additional structure on your plan, do let your insurance company know.
Furthermore, always be aware of the risks they insurance covers. Ideally, if your home plan covers the outbuilding, then your outbuilding should be protected from the same risks.
Appraise the building. The regular practice is for the outbuilding coverage to be ten percent of the value of your house. This will not make sense if the building is worth more than the house. Also, even if it isn’t, ten percent might just be too low to compensate you if any unforeseen situation arises. Do have an evaluator conduct an appraisal of the building. Then consider taking out a separate policy for it.
As stated at the beginning, taking out an insurance policy for your home is a really smart move. If you have an outbuilding, especially if the outbuilding is important to you, then secure it with an insurance plan, too. The basics about what you should know about the process has been discussed above.