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Importance of having Homeowners Insurance
Our home provides shelter and comfort, making it one of our greatest assets and it is important to protect our precious asset.
Homeowners Insurance is an insurance policy that you buy from an insurance provider which helps protect your home and family from unexpected events or disasters. It generally provides coverage to both your interior and exterior parts of your home.
Though it is not mandatory to have Homeowners insurance by law, it is wise to invest in an insurance to protect your home and family and have peace of mind from unexpected events and disasters.
Homeowners Insurance usually includes both property and liability insurance. In addition to protecting the homeowner from damages to their home, it also offers protection against damages arising from liability issues by the homeowner and to them.
In spite of their awareness of the importance of insurance, many homeowners are unaware of the type of coverage they need for their homes.
In the event of a disaster, if the home has a Actual Cash Value also known as Current market value coverage in the policy,, then the coverage usually provides for the current value of the home. It does not provide the coverage to replace the damage on the property.
In the event of a disaster, if the home has a Replacement Cost, then the coverage usually provides the cost to replace the damage of the home. This might increase the premium of the insurance policy but it is worth having a peace of mind. Though, the replacement cost covers the cost of the home to rebuild the home, it does not exceed the limit outlined in the policy. The replacement cost may also be extended according to the coverage needs of the home.
Actual cash value = The amount needed to fix your home - Depreciated amount (Value of your home reduced because of age or use).
Replacement Cost = The amount needed to replace the home into its original new condition.
If you have a mortgage and do not have an insurance policy, the lender may provide you a coverage for the property according to the Consumer Financial Protection Bureau. The policy provided by the lender usually costs more than the regular policy.
Liability coverage is a coverage that is usually included in the home owners policy which help you from paying out of pocket for the damage caused. It provides coverage in cases where you are legally responsible for the damage.
For example, If your dog caused some serious injury to your visitor, it may also help you cover the costs against any lawsuits, legal fees, court costs, medical expenses.
There are some optional coverage that can be added to the policy such as Mold damage, Pet damage, Water backup coverage, Food spoilage, Identity theft, Yard and Garden, Wear and tear, negligence, Pest infestation, Sinkholes, Bed bugs coverage etc.
Generally, a standard homeowners policy does not cover disasters like Earthquake and Flood, which can be added on to the original policy for an additional premium if required.
The events and items covered by your insurance policy differs based on your policy and insurance provider. The conditions and limitations of the coverage vary upon your specific policy. Inform insurance company ahead of time if you have any expensive structures in your property. This will act as a documentation for coverage in case any mishap happens.
Importance of having Auto Insurance
Auto insurance Policy is a contract or agreement between you and the insurance company which protects your finances against a theft, an accident or any other natural causes or destruction of your insured car. The company agrees to pay a certain insured amount if any mishap happens to your car as outlined in the policy.
Without a car insurance, you are responsible to pay for any damages caused or any accidents you are liable for which might easily cost you thousands of dollars.
The auto insurance usually has a number of components in their coverage such as Collision, Comprehensive, Liability and Property damage. The coverage usually varies according to the owner's needs. The limits of coverage may be increased or decreased according to the owner's preferences.
Liability coverage provides coverage for both bodily injury and property damage caused to another by you or others covered under the policy.
Collision Coverage provides coverage for the damage done to your car by hitting another car or any other property such as building, fence, wall etc.
Comprehensive coverage provides coverage to the damage occurred due to theft, Vandalism or any other mishap occurred by hail, flood.
Under insured motorist coverage provides coverage to you when the other driver who has caused accident has insurance but the insurance limits are not adequate enough to cover the damages caused.
Uninsured motorist coverage provides coverage to you when the other driver who has caused accident has no insurance coverage. It helps to cover your injury and medical expenses.
If you are caught driving without a car insurance and are responsible for the accident caused, you may be liable to pay for the damages occurred, may be ticketed for driving without insurance, Driver's license may be revoked and car may be impounded depending on the seriousness of the situation.
You may reduce the insurance premium by increasing the deductible amount. Deductible is the portion that you pay out of pocket in an event of accident or other circumstances. If you decide to do this, it is advisable to set aside a portion of the premium as savings for the emergency purposes.
Importance of having Landlord Insurance
Landlord or Dwelling fire insurance policy covers the rental units that you own. This insurance typically includes both Property and Liability coverage protection against your financial losses or claims.
It usually covers the physical structure of the property, other structures or the personal property that you own in the unit as a Landlord.
It may also cover the medical expenses for another person or your legal costs in case someone got injured in your property that you are responsible for.
Property owners are not required to have a landlord policy, but it is advisable to have one to cover the damages that occur by being the rental property owner.
Homeowners insurance only covers the dwelling that are occupied by the owners, which is why a Landlord insurance is needed.
Usual coverage included in a Landlord policy are property damage, temporary loss of rental income caused by the perils outlined in the policy,
The landlord insurance and its coverage differs depending on the type of tenants occupying the space. Traditional landlord insurance policy is required for the tenants who are under the long term contracts. For tenants occupying Airbnb (short term rentals), short term insurance policy is required.
Landlord insurance policy is similar to the homeowners policy but has less coverage as the coverage of the personal property is limited to the property owned by the landlord.
Generally, a standard homeowners policy does not cover disasters like Earthquake and Flood, which can be added on to the original policy for an additional premium if required.
Umbrella Insurance
Umbrella Insurance coverage always starts after your limits of the primary insurance limits are exhausted.
The limits of umbrella insurance usually starts from a million dollars and up. Also umbrella insurance have minimum limit requirements to be met by the primary insurance before the umbrella policy can be issued.
Umbrella Insurance also covers several situations which are not usually covered by the auto and home insurance policy.
Umbrella Insurance is mainly used to protect your assets from lawsuits, court and jury awards. The liabilities may bankrupt you completely, so having the right limits is crucial.
When the limits of your auto or home insurance is reached, the insurance company may pay your entire limit and all the legal cost will be totally your responsibility. Umbrella Insurance will cover your legal costs.
Typically, primary home, vehicles - cars, boat, RV, etc..., rental properties are combined together under one policy and it protects from almost everything that home and auto insurance does not by filling up the gaps in the coverage where the regular policies claim limits are exhausted.
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