Homeowners Insurance 101
You have just purchased the home of your dreams…now what? You want to make sure you protect your largest investment while also safeguarding the smaller things. Your first step is understanding your policy.
Alfa’s homeowner policy is a package policy, meaning there is coverage for property damage and liability coverage. There are a few losses, such as flood and earthquake, that are not covered under your typical homeowner’s policy. While these are not covered by your base policy, separate policies may be purchased for these coverages. Your agent can help you determine if these additionally policies are right for you.
Homeowners Coverage
The base homeowner policy provides coverage for the following*:
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Main Dwelling Structure
The house you have worked so hard to make a home. This provides coverage to repair or rebuild your home in the event of a covered loss depending on the type of policy purchased.
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Other Structures
It is very common to have structures on the property that are not permanently attached to the main dwelling. Do you have an outbuilding to store your lawn equipment or a privacy fence? Don’t worry, most policies automatically include up to 10% of the value of your home for outbuildings, but we’ve got you covered if you need more. Contact your agent with questions or for additional coverage, subject to coverage limit.
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Personal Property
What would a home be without your treasured possessions? This includes your personal belongings such as clothing, furniture, etc. Some items, such as jewelry and firearms, may have limited coverage. Your agent can help you understand how best to handle those.
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Loss of Use
Any time you have a loss, it is unexpected and not budgeted for; but in the event you have a covered property loss that damages your home to the extent that it is not habitable, this coverage provides for increased additional living expenses. Imagine the peace of mind knowing your policy helps with some of your expenses for being displaced.
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Personal Liability and Medical Payments
You want to host family and friends in your home for fellowship and to celebrate holidays. You make sure your property is safe and ready for your guests, and then the unthinkable happens. One of your guests slips and falls down your stairs and is injured. As the owner of the home, you may be held responsible to pay for bodily injury or property damage to others. This coverage helps protect your financial wellbeing with liability and medical payments coverage.
Now that you know the basic coverages of your homeowner’s policy, let’s go a little deeper to understand your coverage options for your home and personal property. Most policies have at least two options when it comes to exactly how losses are paid.
Replacement Cost
Replacement cost is the cost to rebuild your home or replace your damaged personal property with new items after a covered loss. You will be paid the amount that would replace home and possessions with like, kind and quality at the time of the loss. *Subject to the limit of the policy.
Actual Cash Value (ACV)
Actual cash value is the cost to replace your home or personal property less the depreciation. Most of your personal property, as well as your roof, decreases in value over time. This is known as depreciation and a few factors considered in depreciation are the age and wear and tear.
Actual Cash Value vs Replacement Cost is often a source of confusion among policyholders, yet it’s an important aspect to your homeowner policy. Talk to your agent to better understand these two options.
Some other popular optional coverages include Home Systems Protection, scheduled personal property (for items such as jewelry, cameras, musical instruments, golf equipment and other gifts), and increased limits for theft of firearms or home computers.
Finally, your policy includes a deductible. This is the amount you pay out of pocket if you have a covered loss.
There are a few things you want to consider when selecting your deductible:
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Your deductible amount affects your home insurance premium.
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The higher your deductible, the lower your premium, but the higher personal risk to you.
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In turn a lower deductible equals a higher premium, but less personal risk to you.
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When choosing your deductible, choose the amount that best fits your budget.
Our homeowner insurance products offer a wide variety of coverage options. Get peace of mind knowing your home is protected. Contact your local Alfa® agent to discuss the insurance needs of your home today.
*This is not an insurance policy. It is intended only to provide a general description of Alfa Insurance and/or its product lines and services. An actual policy contains the specific details of the coverages, conditions and exclusions.