Understanding Home Insurance Part 1
Most likely, your home is the most valuable asset you have and one you likely can't afford to replace if a disaster happens. This is why protecting your investment with home insurance is so important.
In this blog
Why you need home insurance
Purchasing home insurance isn't required by Alabama state law, but if you have a mortgage on your home, your lender will require the home to be insured so it can protect its investment.
Even if you don't have a mortgage on your property, home insurance is always a smart purchase that can protect your finances in many ways.
Here are the main functions of homeowners insurance:
What home insurance does and doesn't cover
Two very common home insurance policies are the HO-2 and HO-3. The HO-2, which is less comprehensive, is a "named peril" policy, meaning it only covers a specific list of possible risks. Although we almost always write HO-3 policies, I think it's important to know what is covered and what isn't.
The 16 perils that a HO-2 policy covers are:
1. Fire or lightning2. Smoke3. Theft4. Vandalism5. Windstorms and hail6. Damage caused by vehicles7. Damage from aircraft8. Weight of ice, snow and sleet9. Freezing of household systems10. Riots11. Explosions12. Falling objects13. Volcanic eruptions14. Overflow or discharge of water15. Damage from artificially generated electrical current16. Sudden tearing, cracking or bulging of home
For coverage that is beyond these 16 risks, at Grier Insurance we recommend HO-3 polices. HO-3 policies are "open perial," meaning they will cover ALL risks EXCEPT those the insurance company excludes.
For the broadest homeowners policy, there's the HO-5. This policy will cover both your home and personal property for all problems except those specifically excluded.
There are still damages that no homeowners policy will cover, such as:
However, you can buy flood and/or earthquake insurance from a separate policy. In states like Florida, you may also need separate windstorm insurance.
Talk with one of our agents if you have a certain concern about weather risks in your area or perils that aren't covered on your policy. In most cases, we can add endorsements to your policy to provide you with protection.
Basic parts of a home insurance policy
A homeowners policy has many distinct coverages. Many are included and others you can add.
COMMON OPTIONAL COVERAGES
This is only some of the available coverages. Call your advisors at Grier Insurance and we can help match your particular needs and circumstances.
Part 2 coming soon:
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