by Kristi Waterworth, US News | January 6, 2023
Home insurance is important to protect your investment. But it can be tricky to know if you have the right amount or right kind of coverage.
Owning a house can create a stable base for you to build a financial future upon, but owning a house is not enough. You also must be able to protect your investment in that stable foundation you’re building. That’s why insurance is such an important part of your financial portfolio, especially those policies that can protect your home from damage.
If you’ve had your home’s policy for a while, it can be hard to know for sure if you have the amount of coverage you need, or if you’re covered for the hazards that your home faces as the world changes around you.
Basic Insurance Coverage for Your Home
The most basic type of insurance coverage for any home is a policy commonly called homeowners insurance. These policies aren’t required by law, but are generally a condition of securing and maintaining a mortgage loan. Even if you don’t have a mortgage, though, they’re invaluable to homeowners of every type. They cover the bigger hazards houses can face in most locations, although they do not generally cover flooding.
“Homeowners insurance may be required by a lender if you take out a mortgage, but you should always have a policy, even after your home is paid off,” says Michael Orefice, senior vice president of operations at SmartFinancial in Costa Mesa, California. “Homeowners insurance is not intended for small fixes around the house, but to repair or replace costly damages caused by perils named in a policy. If disaster strikes, and your most valuable assets are destroyed, homeowners insurance helps you get your life together again and saves you tens of thousands of dollars doing it.”
A few examples of common things that homeowners insurance covers are storm damage, fires and burglary. After a deductible payment, the insurance will pick up the vast majority of the cost of repairs, in many cases.
“It may be difficult to come up with thousands of dollars to replace your shingle roof if it is damaged by a hail storm,” says Nicole Brock, agent and owner at Nicole Brock and Associates LLC in Springfield, Missouri. “Perils like this are included so that homeowners can turn in a claim and have assistance with paying for these large out-of-pocket incidents. At my office I have seen everything from claims for repairs done to flooring and drywall from water damage in a basement to a list of stolen items being replaced.”
However, not everything is included in a basic homeowner insurance policy, Brock explains. “Typically exclusions will include damage from a sinkhole collapse, earthquake or earth movement, and your everyday maintenance issues like your hot water tank not working.”
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