A Beginner’s Guide to Home Insurance

The world of insurance, like most other specialized fields, is not beginner friendly. Insurance is often denoted by acronyms, has its own vocabulary, and is not always intuitive. This guide will attempt to help first time home-buyers answer basic questions about insurance and give them a solid foundation for understanding their needs.

What Home Insurance Covers

While it is called home insurance, it really covers much more than that. Home Insurance covers your property- so that means your home, belongings, and any structures on the property. Insurance is extremely valuable because it keeps homeowners from having to pay the cost of losses in full when damage occurs.

The Different Types of Policies        

Not all coverage is equal, and you will be insured differently depending on which policy you choose. Two of the main things to look for are 1) whether your property is covered at replacement cost or at actual cash value, and 2) whether you have a named perils policy or an open perils policy.

Replacement cost policies are much preferred to actual cash value policies. Essentially, they both will cover replacement for your damaged property, but the former does not take into account aging or use, and the latter does. So, a replacement cost policy will replace your couch or carpet with a brand new one at around the same price which you bought the original, where an actual value policy will reimburse you money for the amount which the item would sell on the market today in its used condition.

Secondly, open peril policies are more comprehensive than named perils policies. In this case, the name of the coverage actually reveals what you think it might. Named perils policies cover you for damages accrued during all of the perils named in the insurance. The basic name for this type of coverage is HO-2. In contrast, an open perils policy like HO-3 will insure you for every risk except those excluded explicitly.

Helpful Agents

The best way to ensure that you are getting the right coverage is to speak with an accommodating and knowledgeable insurance agent like those at Corkhill Insurance Agency. We consider how much the policy costs, the quality of coverage, financial stability, and how well a company handles claims in order to come up with a home insurance option for you. Call us today at 407-898-8891 for a free quote!