Decoding Homeowners Insurance
As a potential first-time home owner, there are a lot of tasks to manage. You’ve been to the open houses, scoured the on-line listings and found a great Summit NJ real estate agent. You’ve worked out a budget and a price range, but you are by no means finished researching. Now that you are considering becoming a home owner, insurance should be of the utmost importance.
Homeowners insurance, abbreviated HOI by industry pros, is a policy designed to protect the property owner financially should the home be damaged or should an accident occur on the premises. Carrying a homeowner’s policy is required by virtually every lender. However, you are not required to purchase your policy from the provider that your lender suggests. You are legally free to choose your insurance company.
HOI policies cover two basic categories of potential expense: property and liability. Your policy will cover the cost of replacing the actual house and its contents. It will also protect you from the cost of a lawsuit should there be an injury or accident on the property. Here is a very basic breakdown of an HOI policy and what it covers.
Property
Dwelling: This is the house itself along with all the things that make it a house like wiring, appliances and plumbing.
Additional structures: Outbuildings, sheds and unattached garages should also be covered in your policy. It may also include things like sidewalks and retaining walls.
Personal property: These are the thing you bring into the structure like furnishings, clothing, jewelry and electronics.
You may want to add more coverage to your policy if you have an extensive investment in one of these areas. The policy may cover replacement value or actual cost so be sure you examine your policy. It may also cover “loss of use”, that is living expenses should your home become unlivable.
Liability
Personal liability: This part of the policy protects you against the cost of a lawsuit in the event of an accident of injury on your property.
Medical expenses: This part of the HOI will pay for medical expenses for a person injured on your property, but not for those living in the home.
As with any type of insurance, HOI policies vary greatly from one to another. Your Summit NJ real estate agent can give you some direction as to how much insurance you will need and how much it may add to your mortgage payments. Spend some time deciding how much coverage your new home and its contents will require and shop several different companies for the best price.