When you think of homeowners insurance, you are trying to protect your home or dwelling. Dwelling coverage is part of your homeowners policy that covers your dwelling or the structure you live in. If it is damaged by a fire, severe storm, or any other covered peril, your homeowners insurance will pay to have your home repaired or replaced. The dwelling portion of your policy will cover damages to your home and other structures located on your property.
If you have a mortgage or other type of loan where your property is the collateral, then you will have to purchase dwelling insurance. If you don't have this type of coverage, your lender will buy their own policy and pass the cost on to you. If this happens, the dwelling will be the only thing that is insured. Unless you purchase your own homeowners policy, none of your personal property will be covered. It's important to have your own policy to ensure that you are fully protected from financial loss.
Dwelling insurance will provide coverage for a specific list of perils that are named in your policy. Unless you have an open peril or all-risk policy, your coverage will be limited to the following known perils:
Your policy will list the perils that are covered. Make sure to review this section to ensure you have the perils you want. If not, talk to your insurance agent.
There are several perils that are not commonly included in a traditional homeowners policy. Hurricanes, flooding, earthquake, water backup, and poor maintenance require separate endorsements. Hurricane, flood, and earthquake insurance may only be necessary for certain areas. Your insurance agent can help you determine your risk and make sure you have the appropriate coverage for each additional peril.
It will be up to you to determine how much coverage you need. If your home is destroyed, it may cost more to rebuild your home than what your existing home is actually worth. You have the option to insure your home for its cash value or for its replacement cost. Although the cash value option is much less, it may not be enough to pay off your mortgage or rebuild your home. You will need to work with your mortgage lender to ensure that you have enough coverage to satisfy the loan if something happens to your home.
If something happens to your home, you will need to file a claim against your homeowners policy. If repairs are needed, you will need to obtain estimates so that the insurance company knows how much it will cost. If your home is destroyed, the money you receive will go to pay off the loan or to rebuild your home if you own it outright.
The cost of dwelling insurance will depend on many things. In most cases, it will be based on the appraisal value of your home and what it will take to rebuild your home if it is a total loss. Your insurance agent will help you with all of the calculations.
Have questions about dwelling insurance? Contact the agents at Little & Sons Insurance Services today. We understand how confusing a homeowners policy can be. When you work with our agents, we will take the confusion out of the equation so you understand everything about your policy.
