Insuring Your Property

Insuring Your Property

Insuring your property is necessary for proper maintenance as it protects your home and other possessions from theft or damage. Most banks and mortgage lenders require homeowners to purchase and pay for homeowners insurance policies in addition to their mortgage payments.

Understanding Coverage Types

Some of the primary coverage areas of your homeowner's insurance are:

  • House Exterior and Interior Damage: Your insurer will compensate for damage to the exterior or interior of your house that results from fire, hurricanes, vandalism, or other covered disasters. Damages from floods, earthquakes, or poor home maintenance are usually covered if insurance companies provide separate riders.

    Freestanding garages, sheds, and other structures may also need to be covered separately for insurance purposes.

    Personal possessions like clothes, jewelry, art, appliances, and other home contents are covered by insurance if destroyed in a covered disaster. Most insurance companies will cover about 50 to 70% of the insurance you have on your property.
  • Personal Liability of Damages and Injuries: Standard homeowners insurance policies will cover personal liability for damages or injury to others on your property.
  • Temporary Accommodations During Home Construction or Renovation: A clause in your homeowner's insurance called "accidental living expenses" can reimburse you for hotel rentals, restaurant expenses, and other costs when you need to stay in a hotel or house rental while your home is being built or repaired.

Levels of Homeowner's Insurance Coverage

There are three levels of homeowner's insurance coverage.

  • Actual Cash Value: It encompasses the value of your property and personal belongings after subtracting depreciation.
  • Replacement Value: This coverage pays for the current value of your house and belongings without subtracting depreciation. It helps rebuild your home to its original worth.
  • Guaranteed Replacement Value: This policy covers the total cost of repairing or rebuilding your home, even if it exceeds your policy limit. Insurers usually offer coverage above the limit, often 20 to 25% higher.

What Isn't Covered by Homeowner's Insurance?

Some standard exclusions of homeowner's insurance are:

  • Natural Disasters: Damages caused by floods or earthquakes.
  • Repair and Maintenance Costs: Damage from sewer or drain backups or damage caused by mold, mildew, pests, termites, and rodents may not be covered if you cannot take preventative measures.
  • Acts of War and Terrorism: Policies won't cover damages caused by terrorism, wars, civil unrest, nuclear accidents, and radiation.

Selecting the Right Policy

When looking for the proper homeowner's insurance policy, you must consider the following:

Do a Health Check On the Insurance Company

Investigate home insurance companies by considering their scores on websites of top credit agencies, such as J.D. Power, Moody's, and Standard & Poor's. Also, consider the rank of an insurance company's website on the National Association of Insurance Commissioners and Weiss Research.

Compare Statewide Costs and Insurers

Visit the state's Department of Insurance website to learn the ratings of the home insurance companies licensed in your state. The website also offers insights into home insurance costs in different cities and counties.

Look at Claim Responses

Before choosing a home insurance policy, determine how long the provider takes to receive and handle claim calls.

Analyze the Satisfaction of the Current Policyholders

Ask the insurance company's representative about its retention rate, which reflects the percentage of policyholders who renew each year. You can also find the current policyholder's satisfaction in its annual reports, online reviews, and testimonials from people you trust.

Get Multiple Quotes

Get multiple quotes from at least five providers to determine what people are offering and to get some leverage during negotiations. A carrier you already do business with, like auto insurance, may offer a better rate.

Look Beyond Price

Even though annual premiums are a primary factor, compare policy limits and coverages before choosing your home insurance provider.

Talk to a Real Person

Get your quotes directly from the insurance company or an independent agent who handles multiple companies to get the best prices.

Managing Your Property Insurance

Manage your property insurance and reduce insurance premiums by taking the following steps:

  • Maintain a security system monitored by a police station to prevent burglary and vandalism.
  • Increasing your deductible to a higher level can lower your annual premium.
  • Consider getting quotes for other types of insurance from the same company to enjoy discounts.
  • Pay off your mortgage at the earliest to see your premium drop.
  • Plan for home renovations.


Insuring your property against damages can help protect your home, safeguard your investment, and cover unexpected expenses, offering peace of mind in the face of unforeseen circumstances.