Property owners need to ensure that they are backed with comprehensive homeowners insurance policy coverage to safeguard their property and belongings from damages. As with automobile insurance, dwelling insurance coverage is not mandated by the government. However, homeowners need to purchase this insurance plan because it covers all kinds of potential risks to their household.
Here’s what a homeowner needs to know about dwelling insurance coverage offered by homeowner insurance companies.
What is Dwelling Insurance coverage?
Dwelling Insurance coverage is a type of home insurance that safeguards the property from damages caused by natural disasters, fire, theft, and so much more. This kind of policy covers both inside and outside structures of your home from unexpected damage.
Types of Dwelling Insurance coverage:
To understand how dwelling coverage works, you must understand the different policy types. We’ll describe the main types of dwelling insurance options below:
Homeowners Dwelling Insurance:
This type of insurance coverage is also called basic or fundamental coverage. It protects from theft and fire damage but does not cover floods, earthquakes, or other hazards.
Fully-Protected Dwelling Insurance Policy:
A fully-protected insurance policy consists of all the features that come with limited coverage, plus it includes protection from natural disasters like earthquakes and floods. However, it does not cover damage caused by artificial or mechanical hazards.
Condominium Dwelling Insurance Coverage:
Purchasing a condominium comes with household expenses, including the group insurance cost. This kind of policy covers common areas of condo buildings against natural disasters.
Condo insurance generally includes:
- Building insurance for the structure
- Personal property insurance for your belongings
Renters Dwelling Insurance Coverage:
This kind of policy is perfect for individuals who don’t own their homes but need protection for their belongings. This type of insurance also covers liability that may arise from accidents or injuries sustained by guests or visitors within the rental premises. For this very reason, renters are encouraged to have dwelling insurance coverage.
Business Dwelling Insurance Coverage:
This policy is tailored for small businesses that need insurance protection for their building and possessions. This policy also has business interruption coverage that reimburses an enterprise for income lost brought on by fire, smoke, and other hazards.
Dwelling Insurance coverage: What’s Covered?
Dwelling Insurance coverage can reimburse homeowners when they experience damage to their property. According to the Insurance Information Institute, most standard dwelling insurance policies offer protection for all of the perils listed below.
- Fire or lightning
- Windstorm or hail
- Riot or civil commotion
- Vandalism and malicious mischief
- Falling objects
- Weight of ice, snow, or sleet
- Volcanic eruption
Other covered hazards include accidental overflow of water or steam from plumbing pipes, heating, cooling, automatic fire protection sprinkler system, and more.
This is a general guide for covered risks, varying from state to state or from one insurance firm to another. However, it is advisable to go over the dwelling insurance policy before signing a contract. This way, you’ll be aware of exclusions and limitations in your coverage.
Dwelling Insurance coverage: What’s Not Covered:
While dwelling coverage can safeguard your house and belongings from many potential risks, certain things are not included in the policy.
For example, dwelling insurance does not insure against floods, earthquakes, or landslides. A separate flood insurance policy is needed for such coverage, or you buy a rider for added protection.
Structures that are not directly attached to the home are also not covered. For instance, if your detached garage is damaged, you will need a separate structure coverage policy to cover this loss.
Finally, dwelling policies exclude damage caused by neglect of the homeowner or tenant. This means if you fail to protect your house from mold and termite infestation or neglect to pay for necessary repairs or maintain the dwelling properly, your insurance company will not reimburse you for this loss.
Dwelling Coverage Cost:
The cost of dwelling insurance varies from one state to another. In general, the amount you pay for a policy is determined by several factors such as:
- Type and age of your home
- Cost of repairs in case of damage
- Size, quality, and number of features in your home
- The deductible amount you agree to pay when filing a claim
- Your credit history, your claims history, and your insurer’s claims experience with other customers are also taken into consideration.
Recently the cost of dwelling insurance has gone up significantly due to the increase in frequency and severity of hurricanes, tornados, and other natural calamities. This has also led to higher dwelling insurance premiums for some homeowners.
However, shopping around with various homeowner insurance companies is advisable before buying a dwelling policy. In addition, you may request a home insurance quote from trusted online insurance agencies such as TX Insurance Quotes or go through comparison sites to help you find the best deal on your property insurance.
How much Dwelling Insurance do you need?
It is safe to say that the more coverage you have, the better off you are. But it is also essential to keep in mind that the more you insure, the higher your premiums will be.
So, in short, there is no fixed formula when it comes to deriving adequate dwelling insurance coverage for your needs. You can begin by evaluating your property and then decide what items or features in the house need protection most. For this, you must calculate all costs incurred for rebuilding your home from scratch.
Suppose you do not have a cost estimation. In that case, you can simply seek help from an insurance agent or broker who will provide you with a rough idea about the dwelling replacement costs based on square footage and types of materials used in construction.
Choosing Your Deductible:
When choosing your deductible, you should first decide on the coverage limit you want to purchase. Most people opt for a $500-$1000 deductible, but if you are insuring an expensive home—you may want to consider increasing your deductible. Your monthly premium will be less because you’re taking more of the risk upon yourself by doing this.
Some insurance companies offer a lower deductible on dwelling coverage, but this will increase your premium. The difference between the deductible and the actual amount you have to pay out of pocket is called the “out-of-pocket.”
The less you have to pay out of pocket for damages, the higher your premium. However, if you have a low deductible and your property is severely damaged by a natural calamity, you will end up paying more. In the end, it’s a matter of balancing convenience against financial outlay when choosing a deductible amount.
Dwelling Policyholders can choose three types of deductibles:
Basic Deductible – You will be responsible for paying the first part of a claim. With this deductible, you may have to pay between $250-$1000 before your insurance policy kicks in.
Percentage Deductible – If your home is insured for under $500,000, it is possible to opt for such a deduction. However, if your house is insured for $500,000 or more, you can not choose this type of deductible.
Loss of Use (LU) Deductible – Such a deductible applies when you leave your home because a covered risk has destroyed it. Your insurance company will pay the cost to rent another place while yours is getting repaired.
Homeowners who have a higher dwelling policy limit generally opt for a percentage deductible or a loss of use deductible because these cover a more significant share of their losses if something major happens to their home. Also, people who live in areas with high property tax rates may choose percentage deductibles to save on this ongoing monthly expense.
How Do I Buy Dwelling Home Insurance?
Once you have decided upon how much dwelling coverage you need, it’s time to shop around for the best policy. You can do so by talking to your insurance agent, calling up different insurance companies about their prices, or checking out homeowners insurance quotes online.
TX Insurance quotes is a great online resource that helps you get the dwelling policy that best suits your needs. Simply fill out the online quote request form, and one of our licensed representatives will get back to you within 24 hours with a customized insurance quote.