NYC Insurance Blog

Homeowners Insurance Guide: Everything You Need to Know

Your home might be your most valuable asset, which you cannot replace out of pocket if disaster hits. That’s why homeowners are advised to buy the right homeowners insurance policy. Homeowners insurance helps you protect your home and is often a prerequisite for mortgage lenders. This article will walk you through the basics of homeowners insurance.

Do Homeowners Insurance Policies Vary?

Homeowners insurance varies depending on the budget and risks covered. Therefore, talk to your insurer to determine the level of coverage provided by a specific policy. Carefully read your insurance policy to know the covered risks, coverage level, and monthly premiums. Here are some of the terms you should differentiate:

• Replacement cost value – refers to the total cost of repairing your home at the current (today’s) price of building materials.
• Actual cash value – refers to the market value of your home, i.e., the initial value of your home with depreciation cost considered. It is crucial to note that insurance coverage based on the actual cash value, is the cheapest option because claim payments are lower than the replacement cost value option.
• Guaranteed or extended replacement value is the best coverage to buy because it guarantees the cost of rebuilding your home or replacing your possessions, even if the amount exceeds your policy limit. If you can afford extended replacement value, your mind can be at ease knowing that you are covered if you encounter a disaster. Understanding you coverages is important, having a broker to guide you will make the process easier, Call Us Today!

Types of Homeowners Insurance Coverages

Here are the three types of coverage you should know:

• Building insurance – provides coverage to your home’s structure against accidental damage or loss from covered perils. Depending on your policy or insurer, building insurance might also offer coverage for other structures, such as guesthouse, driveway, walkway, fence, or shed.
• Home contents insurance – this policy covers your household items/contents like furniture, clothing, and home appliances against fire, theft, burglary, natural disaster, etc. The covered perils depend on the type of insurance policy you have purchased.
• Personal valuable insurance – although homeowners insurance can provide coverage to a certain limit, it may not provide coverage at all. Therefore, consider purchasing a personal valuable insurance policy to protect your valuable personal items like jewelry, laptops, smartphones, and priceless art. With this coverage, you can protect both specified and non-specified items. Specified items refer to valuable items you want to protect, while non-specified items refer to items or belongings most people own or have in their homes.

What Won’t Homeowners Insurance Cover?

Homeowners insurance does not cover:

• Earthquakes, sinkholes, and landslides
• Nuclear hazards
• Flooding resulting from external causes, e.g., storm surge or heavy rainfall
• Infestation from mold, vermin, birds, etc.
• Neglect/ wear and tear
• Power failure
• Government action, for example, war

Give NYC Business Group a call, we will make sure you know exactly what you have coverage and DO NOT have coverage for!

Luckily, for some of these risks, you can buy separate coverages. For example, earthquake and flood insurance can be purchased separately, while windstorm insurance is available in hurricane-prone areas.

Buying homeowners insurance is engaging because you must research well, ask the right questions and choose a reputable insurer. On average, homeowners insurance policy costs between $1,000 and $3,000 per annum. However, the final price is determined by factors like location, crime rates, your home’s age and condition, credit history, and your deductible. Analyze your options beforehand to get the best coverage and value for money.

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