Your home is probably the most expensive asset you own. Home insurance policies help protect your investment and keep a roof over your family should the unexpected happen.
What is Home Insurance?
A homeowners insurance policy not only protects your home from damage to the inside and outside of the property, it also provides coverage against the loss or theft of personal possessions. Homeowners insurance also provides personal liability coverage in the event anyone outside of your family unit is accidently harmed on your property. If you do not own your own home, but you are looking for coverage to protect your personal belongings, our renters insurance information will explain your options.
Home insurance, in most cases, is a required policy as mortgage lenders will not provide a mortgage unless the property is fully insured up to the market value of the property.
Homeowner Policy Types
There are three different types of homeowner policies, each providing different levels of protection.
Actual Cash Value
In the event of a claim the actual cash value policy pays out the cost of the property and possessions after depreciation, which means how much the items are worth today, not how much you originally paid for them.
In the event of a claim the replacement cost policy would pay out the cost of the property and possessions without taking depreciation into account so you would get back what you originally paid.
Extended Replacement Cost
In the event of a claim the extended replacement policy pays out the cost of your property and possessions and has additional coverage to protect you against inflation. This ensures that you are able to rebuild / replace should the worst happen.
What makes up a Homeowners policy?
The homeowners policy is made up of several areas, each of which have their own liability limits. It is important to make sure the coverage you choose has enough coverage where you need it and you are aware of what is and isn't covered.
When we talk about property coverage in household polices we are talking about both the physical home itself as well as the personal property inside it. The home itself will be covered based on the policy type discussed above. It is worth noting that if you have additional structures on your property, such as a shed, freestanding garage, or especially relevant here in Huntington Beach an outside dining area or pool, you should ensure that these are included in your coverage.
The level of personal property covered will vary between policies, but on average most insurance companies provide between 50% and 70% of the value of the structure as the coverage level for personal property. If you have a lot of expensive items, such as jewelry, collectibles or art, you may want to add a rider to the policy which increases the coverage level for these items. The personal property coverage actually extends outside of your home so if you lose your diamond wedding ring while out shopping you are still covered.
When you buy your policy you need to make sure you have the property coverage you need based on where you live. For example, most naturally occurring events such as wind or lightening are covered, but others such as floods and earthquakes are not and a seperate disaster policy is required. Fire is usually a covered event however, the large wildfires of recent years here in California have left some insurance companies removing this coverage from areas deemed as high fire risk. Make sure you ask before purchasing your policy if this applies to you.
The liability portion of the policy protects you from any legal action someone outside of your family unit may bring against you should they become injured on your property. This section of the coverage extends outside of your home, so if you accidently cause damage to someone else's personal belongings you could use your homeowners policy to pay for the damages you caused. The coverage also includes your pets. If your dog bites the neighbor whether they are in your yard or their own, the policy would cover the associated medical bills.
As with all policies, the liability has a coverage limit and you are liable for expenses over that amount. If you have a pool it is highly recommend that you take out additional coverage via an umbrella policy to protect you against legal action that could be taken against you if someone was to drown. It is worth noting that if someone broke into your premises while you were not at home and drowned in your pool you would still be legally responsible, so please take this recommendation seriously if you have a pool.
Loss of Use
Your homeowners policy will provide loss of use coverage, which provides funding if you are forced to move out of your house while it is repaired or rebuilt. This type of coverage not only covers things like a hotel stay or rent, but can also be used for other incidental expenses you may incur, such as restuarant meals. This section of the policy has two limits; the first is an amount and the second is the time. These limits represent the total amount of money you can claim for living expenses while out of your home and how long the payments can be made for. In other words, if your house burns down you cant live in a 5 star hotel for free for the rest of your life!
Depending on the policy you chose, there are numerous additional benefits that are often included or can be added upon request. These extras include things like protection against errors in building regulations, coverage for the costs associated with identity theft, and coverage for business property.
How much does a Homeowners policy cost?
The premium you pay to insure your home will vary greatly depending on the coverage you choose, but that is not the only consideration. Other determing factors include your past claims history and that of the property itself (yes, even before you owned it). The materials used to build your home also play a part in setting your premium as some construction is more resilient than others. External factors, such as the neighborhood you live in and the crime rate in the area, also play a part in premium calculations.
Premium reducing tips
There are a couple of ways you can reduce the premium you pay for your home insurance. A burglar alarm that is monitored by an alarm company who will contact police on your behalf can lower your premium. Rather than lowering your coverage levels you could consider raising your deductible, that way you still have the coverage you need in the unlikely event you need it. Another premium reducing tip is to utilize the multi-policy discount, such as a multi-vehicle discount, auto/home discount, home/umbrella discount, auto/home/life discount, and others as well. One of our agents will always be happy to review your personal circumstances and create a policy with the protection you need.
High value homes
What is a High Value Home policy?
A high value home insurance policy is not based on the market value of the property, but rather it's based on the rebuild value. The rebuild value includes all of the fixtures and fittings inside the property, not just its structure itself. The policies have expanded coverage, include additions that would otherwise be seperate endorsements on standard home insurance policies, and provide perks like immediate payouts after a loss.
Examples of the additional benefits provided by high value policies include:
(actual benefits vary by insurer)
- Property and belongings insured at replacement cost.
- Higher limits for expensive items like jewelry and art.
- Deductible waivers for losses over $50,000.
- Identity theft coverage.
- Unlimited additional living expenses.
- Loss prevention consultations.
- Free home appraisal services.
- Business property coverage.
Frequently Asked Questions
Does home insurance cover against floods?
It depends! If your house floods due to a broken pipe, then yes; however, if it floods due to rain, then no. Floods caused by storms are considered a natural disaster and are not covered. Seperate policies are available for this type of coverage. If you live in an area designated as high flood risk then your mortgage provider may require you to purchse a flood insurance policy.
Do I need to take an inventory of all my possessions?
It is not a requirement to produce a list of all of your belongings, but it is a good idea to do so should you ever suffer a loss and need to make a claim.
How often do I need to review my home insurance?
If you make any significant changes to your home, like adding a pool or an addition, then you should make sure the changes are added to the policy. Also, if you make any large purchases you should check whether they will be covered or if you need a rider added to the policy to cover the item.
If I have a home in another state does any of my coverage transfer?
Yes, your liability coverage extends to cover other properties you own, even if they are out of state.