Finally, assess your liability risk. Remember that you are responsible if someone falls down the stairs, is bitten by a dog, or slips on the sidewalk carrying your mail. A homeowner’s insurance policy can cost as little as $100,000. Increasing your personal liability and insurance policy or additional coverage to $5 million may be considered to protect your assets in the event of an emergency.
Know That You’re Covered With Umbrella Insurance
The cost of premium homeowners insurance depends on the amount of coverage, deductibles, and other options you may have. In general, the higher your deductible and the less coverage, the higher your premium. But going the cheap route can put additional financial pressure on you if an event damages your home or property.
Including additional features, such as a general policy, may cost more. But consider that there are many other things you are missing out on like a luxurious home and luxury items. Shopping around to compare options can help you find a policy that meets your needs at the best price. If you own a home or are thinking of buying one, you may be wondering what the difference is between a home warranty and home insurance. After all, it protects your investment—and your wallet—if something goes wrong. However, home warranties and home insurance policies provide many protections. Knowing the content of each section will help you decide whether you need both.
A home warranty is a service contract that helps cover the cost of repairing and replacing covered appliances and home systems. Instead of paying monthly or yearly fees, you’ll get flat rates for service calls.
If an appliance or system under your warranty breaks, your home warranty company will send a technician to diagnose and fix the problem – you just pay the service call fee. Typically, these plans have coverage limits: The policy can cover up to $1,500 per year per qualifying device, with an annual claims limit of $15,000.
Mapped: Average Homeowners Insurance Rates For Each State
If you receive title to your home as part of a real estate transaction, coverage begins when you close on the home purchase. However, if you purchase a warranty on a home you already own, you will have to wait 15 to 30 days before the coverage takes effect.
Home warranties cover appliances and systems in new and existing homes. Most home insurance companies offer three types of plans:
Most companies will let you add coverage (for an additional fee) for special items not included in the standard plan. Common “add-ons” include pools, fields, septic systems, wells, shallow sprinkler systems, and other appliances (e.g., second dishwasher, air conditioner).
Home insurance (also called homeowner’s insurance) is a type of property insurance that protects against loss and damage caused by insured perils. According to the Insurance Information Institute (III), a homeowner’s insurance policy includes four main types of coverage:
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The most common home insurance policy is HO-3, which covers your home, contents, and liability. Under the III, an HO-3 policy provides broad coverage and protection against 16 accidents and perils:
Homeowners insurance also covers your personal liability for injuries to other people (people who do not live with you) and their property while they live in your home. The most common liability claims are dog bites, home accidents, falling trees, drunk guests, and injured housekeepers.
Home insurance policies do not cover damage or loss due to floods (natural or man-made) or earthquakes. Depending on where you live, it may be a good idea to add—buy a separate insurance policy for—floods or earthquakes. Ask your insurance agent if it is available in your area.
Another thing that can affect home insurance premiums: Dogs. If you own a “dangerous” breed of dog, the insurance company may increase your premiums, exclude dog liability from your policy, or cancel the coverage altogether.
What Does Homeowners Insurance Cover?
A home warranty helps cover costs when a major appliance or system in the home breaks down. Home insurance, on the other hand, protects your home and personal belongings from theft and other losses, while also providing personal loan coverage. If you have a mortgage, your lender may require a home insurance policy. Of course, although it is not required, you need to protect your investment with a good insurance policy.
Although home warranties are optional, they can provide a layer of protection and give you peace of mind. This can be especially important if your equipment and systems are not covered by a standard warranty, are at risk of damage or costly replacement.
Before you buy a home warranty or home insurance policy, read the fine print to learn what is and is not covered. If it doesn’t fit your needs or budget, find a policy that does. This way, you can avoid surprises if something goes wrong.
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What Does Homeowners Liability Insurance Cover?
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