Document of Homeowners Insurance Policy for background

Homeowner’s Insurance: The Ins and Outs

By: James Abbey, July 23, 2015

Homeowner Insurance can be a tricky and confusing thing, especially after all of the paperwork your mortgage company may have given you to fill out.  As a website dedicated to bringing knowledge to home buyers and sellers, Free Home Values would like to offer you information regarding homeowner’s insurance.  As a side note, most of the companies will offer free insurance quotes online, which will save you some much needed time during your search for an insurance company, also, visit our article What are the Benefits of Looking at More than One Insurance Company, for more information.

The elements of a homeowner’s insurance policy are pretty standard (there are exceptions of course), basically the policy guarantees that the insurance company will cover the costs associated with the below issues:

Damage to the interior or exterior of the building – In case the exterior and/or interior of your house sustains damage because of a fire, hurricane, lighting, vandalism, or any other disaster covered by your policy, the insurer will compensate you so that your house can be repaired or even rebuilt, however, in case of a flood, earthquake, or poor home maintenance, you will have to usually add separate riders to your policy in order to ensure that your home is covered for those particular disasters.

Theft or damage to your personal belongings – When a natural disaster happens, it’s not just your house that is damaged, your personal belongings usually suffer some damage as well.  This part of the policy covers those items like; clothing, furniture, and appliances.  There are even some policies where you can get a type of “off-premises” coverage, which would protect items like your jewelry if they are lost, damaged or stolen, no matter where in the world you may be.  Please be advised that depending on the type of policy and/or insurance agency, there will be a limit on the amount of coverage you will receive, so ensure that the most important items in your house are listed in the policy.

Personal Liability for damage or injuries caused by you or your family – This is a clause in your policy and it can even include your pets, that essentially states that your insurance policy will cover items and/or injuries you or your family may cause or that may be caused to you.

Hotel or house rental while your home is being rebuilt or repaired – While this particular type of coverage may seem like something you won’t need, it could end up being one of the most important aspects of your policy, as it will reimburse you for the cost of rent (or hotel stay fees), restaurant meals and other costs you may incur because your house is currently inhabitable.  Just remember, like the “Theft or damage to your personal belongings” section, your insurance company will most likely have a limit on what they will reimburse you for, so be sure you are aware of that limit at the time of the signing of your policy.

In regards to the coverage relating to your homeowner’s insurance policy, there are primarily three different levels, actual cash value (which covers the house plus the value of your belongings after the depreciation value has been dedicated), replacement cost (the insurance company will provide the actual cash value without dedicating the deprecation value, essentially allowing you to repair or rebuild your house up to the original value), and guaranteed (or extended) replacement cost (this option includes an inflation-buffer which allows you to receive all funds needed to repair or build your home, even if it’s more than your policies original limit, typically there is a ceiling to this particular option, about 20% to 25%.

Shopping around for insurance quotes is not a difficult task at all, as you can do it easily from online. You can get the best insurance coverage with the best rates by visiting We can help you find and compare auto, home, life and health, homeowners, and renters insurance online.

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