Zielonka Financial Services LLC

(888) 967-1040

Insurance Read Time: 2 min

Understanding Homeowners Insurance

Purchasing homeowners insurance is not only critical for protecting your home, your personal property and against any potential liability, but if you have a mortgage, your lender will require it.

What’s Covered

A homeowners insurance policy is a package of coverages, including:

  • Dwelling: Covers damages to your house and any attached structures, including fixtures such as plumbing, electrical and HVAC systems.
  • Other Structures: Pays for damage to unattached structures, including a detached garage, tool shed, fence, etc.
  • Personal Property: Covers personal possessions such as appliances, furniture, electronics, clothes, etc.
  • Loss of Use: Reimburses for additional living expenses while you are unable to live in your home.
  • Personal Liability: Pays claims if you are found liable for injuries or damages to another party.
  • Medical Payments: Pays the medical bills incurred by people who are hurt on your property or by your pets.

Remember, these coverages pertain only to losses caused by a peril covered by your policy. For instance, if your policy doesn’t cover earthquake damage, then losses will not be reimbursed.

Types of Homeowners Policies

The types of covered perils will depend on the type of policy you buy.

The Special Form is the most popular policy since it insures against all perils, except those specifically named in the policy. Common exclusions include earthquake and floods. Typically, flood insurance is obtained through the National Flood Insurance Program, while earthquake coverage may be obtained through an endorsement or a separate policy.

Limits of Coverage

Your policy will impose limits on the amount of covered losses.

If you have a valuable art collection or jewelry, you may want to secure additional insurance on those items.

Be aware of whether your policy insures for replacement cost (pays the cost to rebuild your home or repair damages using materials of similar kind and quality) or actual cash value (home value based on age and wear and tear), which may not cover all your losses.

Coordinating Umbrella Liability Coverage

Individuals with significant assets may want to consider attaching an umbrella policy to their homeowners policy, which provides liability coverage in excess of the liability limits of your current policy.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Bull & Bear Markets: A Timeline

Bull & Bear Markets: A Timeline

This helpful infographic will define bull and bear markets, as well as give a historical overview.

18 Years’ Worth of Days

18 Years’ Worth of Days

The average retirement lasts for 18 years, with many lasting even longer. Will you fill your post-retirement days with purpose?

Retirement Income and the Traditional Portfolio

Retirement Income and the Traditional Portfolio

Experiencing negative returns early in retirement can potentially undermine the sustainability of your assets.

 

Have A Question About This Topic?







Thank you! Oops!

Fallen Tree Damage—Who Pays?

Your liability for damages that occur when a tree on your property falls on your neighbor’s property is not clear cut.

Emotional vs. Strategic Decisions

Information vs. instinct. Are your choices based on evidence of emotion?

Insurance Needs Assessment: When You're Young and Single

Even if you’re young and single, you should still consider protecting yourself.

View all articles

Should I Buy or Lease an Auto?

This calculator compares the financial impact of leasing versus buying an automobile.

Federal Income Tax

Use this calculator to estimate your income tax liability along with average and marginal tax rates.

How Compound Interest Works

Use this calculator to better see the potential impact of compound interest on an asset.

View all calculators

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

An Inside Look at Retirement Living

A number of questions and concerns need to be addressed to help you better prepare for retirement living.

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

View all presentations

Charitable Giving: Smart from the Heart

Do you have causes that you want to support with donations?

What Can a Million Dollars Buy You?

$1 million in a diversified portfolio could help finance part of your retirement.

The Fed and How It Got That Way

Here is a quick history of the Federal Reserve and an overview of what it does.

View all videos