When you purchase a home, you will be required to have insurance. Not only will having insurance protect you, the homeowner, should your home be damaged, but it will also help protect the lender. After all, they do have an investment in your home and if it’s destroyed and you don’t have insurance, they will also lose a lot of money.
Homeowners insurance is designed to protect your home against damages to the home, or loss of possessions in the home. It covers many scenarios that may happen that can damage your home such as:
If you live in an area that is prone to floods or earthquakes, it is a good idea to purchase an extra policy, as flooding is typically not covered in homeowners insurance. There are several different levels of homeowners insurance:
Actual cash value is “the amount equal to the replacement cost minus depreciation of damaged or stolen property.” You will be reimbursed with the estimated value of your losses.
On the other hand, replacement cost is the cost of what you have to pay when you replace an asset with a similar asset at the current value. For example, if you buy a computer worth 500 dollars and it is stolen, you can replace it for what it is currently worth on the market.
The last type of homeowner’s insurance, is called guaranteed replacement cost, or extended replacement cost. This policy guarantees that your home will be returned to the state it was before the damage was incurred. Guaranteed replacement cost is considered the highest level of protection for your home and assets.
It’s not recommended to forgo homeowners insurance. Not only does it cover your home and possessions, but it also can provide liability protection should someone get injured on your property. That way, if you are sued, you have some money to defend yourself and prevent the court from taking your property or seizing some of your savings.
Putting a home into a trust may seem like an option reserved for older homeowners who have paid off their mortgage and have accumulated an estate, including assets such as a home, motor vehicles, various investments, boats, rental properties, furniture and even a vacation home. However, having a home that’s owned outright is not necessary […]
The start of a new year is often seen as the time to make major changes in life. While many people resolve to start hitting the gym, losing weight, reading more, or making a career change, others may decide to buy a new home in the coming months. That’s a great goal, one that can […]
Buying a home is one of the most exciting events in a person’s life. A new home can mean a new direction, a major step forward, the beginning of a family or just a fun opportunity to live in a new state, city or neighborhood. It’s also a complex task that involves several important steps. […]
