Is Homeowners Insurance Worth It?

People often question whether home insurance is worth the expense. After achieving the real American dream of homeownership, it can be difficult to consider additional expenses. However, homeowners insurance is essential to ensure the protection of your home. Insurance is something we purchase in hopes we never need to use it, but if a weather event or accident happens, you will be grateful to have the coverage!

Perils

A typical policy covers at least 12 perils which typically include:

1. Fire
2. Lightning
3. Smoke
4. Windstorm
5. Hail
6. Explosions
7. Riots
8. Civil commotion
9. Impact from vehicles
10. Impact from an aircraft
11. Vandalism
12. Volcanic eruption

A more robust policy would be a form HO5 (all perils), or an H03 (all perils for structure, named perils for personal property). All perils means it covers all causes of loss, unless specifically excluded, whereas named perils are only what is written in the policy.

Regardless of the type of policy, a homeowner should always make sure they have “replacement cost,” which means if (or when) there is a claim, the damaged property is replaced at the cost of it being new instead of depreciating the property.

Deductibles

With every policy, there will be a deductible, which is an out-of-pocket cost that is applied before the insurance carrier pays out a claim. For example, if there is a $1,000 deductible on a policy and $10,000 in damages occur, the insurance company will pay $9,000 and the insured will be responsible for $1,000. Common deductibles are $1,000, $2,500 and $5,000.

Renters Insurance

If you don’t own your home, it is still important to insure your belongings. While home insurance covers both the physical structure of the property and its contents, renters insurance covers the contents only. Both home and renters policies insure personal liability coverage. This protects against lawsuits for injury or property damage to others that the insured may encounter. 

Replacement Cost

Most home insurance companies require a home to be insured at no less than 80% of its replacement cost. Proper protection to replace a home and its belongings at current market prices in the event of a loss is known as replacement cost coverage. This prevents the home from being underinsured or only insured at the depreciated value.

The most important thing people should know about homeowner’s insurance is the necessity for transparent communication with your agent and carrier. It is important to:

• Understand what is and isn’t covered
• Determine the value of replacing a home and its contents
• Have knowledge of premiums and deductibles

While this can be a lot to process, it is vital to have a patient insurance agent, one who is willing to take their time to educate the insured and ease the process of purchasing insurance.

Customers should be able to walk away feeling secure and knowing their assets are well-protected. This level of service provides the education and knowledge needed to understand coverage, deductibles, perils and claims. It allows the insured to make the best decisions to protect their homes and family for years to come.

For more information about home and renters insurance policies or to get a quote, reach out to The Churchill Agency today via 855.531.8777 or insurance@thechurchillagency.com.