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Why Choosing the Wrong Homeowner’s Insurance is a Costly Mistake

Purchasing homeowners insurance is usually a net positive unless you’ve bought the wrong kind of policy that won’t cover the recent damage incurred on your home. Since insurance is a complicated topic, many homeowners buy the wrong policies by accident. To avoid this situation, let’s take a look at some of the homeowners’ policies that could benefit you.

What Does Basic Homeowners Insurance Usually Cover?

It’s impossible to generalize homeowners insurance because every policy will differ depending on your house’s size, your premiums, and your location. For example, if you have made multiple insurance claims on your homes, your insurance premiums (cost) will rise, which may price you out of specific home insurance packages.

Your premiums may also rise after a home inspection, but there are insurance companies that don’t require home inspection in your state that are more likely to be generous with claims.

The following are the most common covered perils:

  • Water damage that isn’t from flooding
  • Weather damage from hail or wind
  • Fire and smoke damage
  • Stolen property
  • Collapsed roofs or structures due to ice or snow
  • Vandalism
  • Damage related to civil disturbances
  • Gas explosions
  • Damage caused by aircraft or vehicle

Most homeowners insurance will also cover part of your house’s contents that is affixed to your home, like the outbuildings, landscaping, and fencing. In the event of an accident that requires you to live out of your home, most insurance companies will provide you with temporary living expenses and reimburse said expenses sometime after your home is repaired.

Finally, most basic homeowner insurance will provide liability coverage if a third-party, a family member, or pet is injured on your property or if someone injures someone else on your property.

How Much is Homeowners Insurance on Average?

The average annual premium throughout the United States is around $1,200 a year, but many factors play a role in the cost of your premiums, including the city, state, and home you live in. It’s possible to pay as little as $400 a year, or as much as $4000.

Similar to life insurance, your home insurance will rise if you’re at a greater risk. What determines your property’s risk is the construction, occupancy, protection from natural disasters, and exposure to the elements. The age of your home, credit history, and your home location are the most expensive aspects that can affect your homeowners’ insurance…

…unless you pay out of pocket.

What Isn’t Covered by Homeowners Insurance?

While the list for insurance coverage appears to be comprehensive, many common disasters aren’t covered by most policies.

Flood and earthquakes aren’t covered, even if you live in an area that is more likely to be affected by these natural disasters. For this reason, it’s incredibly important that you add these occurrences to your coverage on top of traditional homeowners insurance. As a positive, your premiums will be low if you’re in a high threat area.

Landslides, mudslides, and sinkholes aren’t usually covered as well. Nuclear or warfare damages are also not covered, but it’s unlikely you’ll need this insurance unless you live close to a nuclear reactor or war becomes a possibility. Homeowner neglect may also make your homeowners’ insurance null in most circumstances.

Depending on your area, it’s likely impossible to cover your home for every possible calamity unless you want to pay high rates. Depending on how many disasters you want your homeowners’ insurance to cover, it may actually be cheaper to move.

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