What Are the Different Types of Home Insurance That Exists Today?

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Did you know most Americans lack the coverage to repair their homes if faced with a natural disaster? The loss of your home and its contents would be devastating. Are you protected in case of a flood, hurricane, or catastrophic event?

As a homeowner, you know that it’s important to have home insurance. You want to protect yourself against accidents, lawsuits, and more. But there are so many types of home insurance, it can be hard to choose one that’s best for you.

In this blog post, we’ll take a look at the different types of home insurance. So sit back and relax – we’ve got everything covered!

The Two Types of Home Insurance

There are two major kinds of home insurance: basic protection and additional coverage. Basic Protection has to do with the housing unit, what’s inside it, and your legal liability.

Basic protection covers your house against situations such as:

  • Damage
  • Theft
  • Loss of use
  • Most natural disasters

This type of insurance often doesn’t cover floods, earthquakes, or war damage. It is required by mortgage companies, who hold the policy. The insurance company pays the mortgage holder if you have a damaged home and can’t pay.

But be wary, sometimes those in the insurance industry will dispute your claims. You’ll want to consult lawyers familiar with property damage claims to protect yourself.

Within Basic protection, you can also opt for contents coverage and personal liability.

Contents Coverage

Contents insurance covers your belongings such as furniture, appliances, and personal clothing. Your insurance will cover 50-70 percent of the estimated value of your belongings.

Personal Liability Insurance

This type of insurance is helpful when you’re sued for an injury on your property. Personal liability coverage helps with lawsuit costs and damages. You can choose from a minimum of $100,000 to as much as $1,000,000.

Additional Types of Coverage

There are also home insurance plans that include special coverage types. You may choose a “replacement cost” policy. This policy covers the house’s market value or replacement value – whichever is higher.

Say you bought a three-bedroom house ten years ago for $100,000 and it is now worth $250,000. A replacement cost policy would insure the house for $250,000 even though you paid only half that price.

This policy type usually has a deductible clause. The higher your deductible the lower your premium.

Another policy option is a “guaranteed replacement” coverage. This type of coverage is very expensive. But it can save you money if your house has to be rebuilt after suffering extensive damage.

You’ll be covered against fires, tornados, mold damage, and more. In simple terms, this type will cover your home for the full value, without deductibles. It is almost like buying a new house every time you make an insurance claim.

Home Insurance Made Simple

No more worrying as you search up the different types of home insurance online. With a little research, you’ll be confident you chose the best home insurance for you and your family.

Eager to learn more about how to be a smart homeowner? Be sure to browse through our other sections on this site.