first time home owners

Homeowners Insurance: What It Is and What It Covers

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Your home is more than just a roof over your head. Whether you’re a first-time buyer or a homeowner looking to learn more about protecting your property, you need to understand the basics of homeowners insurance in Los Angeles, CA. To help you understand the ins and outs of homeowners insurance coverage, read on.


What is homeowners insurance?

Home insurance is designed to protect your property. It covers the structure of your home as well as your belongings from disasters, such as a fire, storm, or theft. If the worst does happen, your homeowners insurance policy should be there to rely on so that you receive compensation to replace or repair your property. Home insurance will cover unintentional damage or destruction by fire, smoke, wind, hail, theft, vandalism, and more.


Who needs home insurance?

In most cases, every homeowner needs to take out an insurance policy. Unless you are paying cash for a property, it is likely that your mortgage lender will require you to purchase coverage. This is to protect their interest in the property. If you own your house outright (for example, there’s no mortgage on it), you technically do not have to carry insurance. However, all homeowners can benefit from coverage. Before dismissing coverage, you should ask if you could afford to replace your home’s structure and all of your belongings out-of-pocket right now. If you could not, which many homeowners could not afford to do, then you should consider home insurance.


What does it cover?

When you insure your home, you are protecting more than just your building and four walls. Standard home insurance policies typically include six types of coverage:

  • Dwelling – This covers damage to the home and the attached structures, such as a porch or a deck.
  • Other structures – This covers stand-alone structures on your property, such as a shed or a fence.
  • Personal property – This helps to pay to repair or replace belongings that are stolen or damaged in a covered event, such as a fire, storm, or burglary.
  • Additional living expenses – If your home is uninhabitable because of a covered loss, this part of your home insurance policy will help to pay for additional costs incurred while away from home, such as hotel rooms, restaurant meals, and additional transportation.
  • Liability – If someone gets injured or their property is damaged because of you, either unintentionally or through neglect, this coverage can help cover their medical expenses, rehabilitation costs, and legal fees if they decide to sue you.
  • Medical payments – This helps to pay to treat someone injured on your property, regardless of who’s at fault. It also helps to pay if you, a family member, or a pet injures someone elsewhere.


What does home insurance not cover?

Your homeowners insurance is designed to protect you from the worst, most common disasters that affect a home and a homeowner’s pocket. However, every policy will have limits. There will be a few things that are not going to be covered under the typical home insurance policy. Anything that is not covered on your policy but is covered in a separate policy is called a rider. For example, your home insurance will cover your jewelry, protecting it from damage and loss – but only up to a certain point, say $1,000. That means if you have a ring that exceeds this amount, you will need to secure additional coverage that adequately protects it. If you have additional items of high value, such as collectibles, musical instruments, golf equipment, antiques, fine art, or expensive jewelry, you may need to secure additional coverage.


Another example would be flood insurance. Although you may not think that you need flood insurance in California, no home is immune to flooding. Because flooding is considered a mass destruction event, you will need to take out a separate policy in order to obtain flood coverage. The same goes for earthquake damage. Your standard home insurance policy will not cover damage from earthquakes. That means you need a separate policy to protect your home and belongings.


It’s also worth noting that if you have started a business from the comfort of your home, your standard home insurance policy may not cover your business equipment and liability. Talk to your insurer about adding on coverage or taking out a new policy for your business to protect your assets.


Finding homeowners insurance

Finding good homeowners insurance coverage does not have to be difficult. If you are a first-time homebuyer, work with an agent who will walk you through the process of acquiring coverage for the right time. While he or she will help you, it is worth understanding the basics of what you need in terms of cover. Remember, do not insure your home for the market value. The price that you paid for the house will likely be different from the number for which you insure it. This is because the cost to rebuild your home may be higher or lower than the price you paid for it or the price you could sell it for today. This number tends to fluctuate depending on material and labor costs.


It is advisable to conduct a home inventory to understand the value of your belongings so that you can secure a suitable policy. If you have items of high-value, keep in mind that you may need to secure additional coverage.


In order to keep your home insurance in line with your needs, remember to review your home insurance policy bi-annually or as often as your needs change. When you make changes to the house, host more parties, adopt a dog, or make a new purchase, it is worth letting your insurer know. Also, regularly update your home inventory when you buy, inherit, sell, donate, or throw away items. This list will help restore your precious belongings if the worst happens.


Are you looking for home insurance? The team at Hoffman Brown Company are ready and waiting to help you find reliable and responsible insurance for your property. As an independent insurance agency serving homeowners across California, we are well-versed in finding homeowners the insurance policies they need and deserve. Whether you have high-value belongings, a high-value home, or both, we can help. Contact us on (818) 986-8200 to get started.