Have you recently purchased your first home? Or maybe you have been a long-time homeowner, but you’ve never quite understood what coverage you are paying for with your home insurance premium. In either case, it is wise to take a minute to understand your insurance coverage as an Arizona homeowner.
Knowing how your home insurance policy works can help you to ensure that you are receiving the services, you are paying for and help you to find the best price for the coverage you need. Hopefully, you will never need it, but if your home does sustain damage, understanding your coverage beforehand will help you to know whether that claim should be covered by your insurance company or not from the get-go. This can save you research and stress in tense or time-sensitive moments.
Here’s a quick breakdown to help you gain a basic understanding of how homeowners insurance in Arizona works.
Who Needs Home Insurance?
If you own a home, you need to have a home insurance policy. You can’t afford not to. Property damage can add up quickly and, in some cases, can even cost more than your home is worth. Even if you have a savings account that can cover minor damages here and there, your home insurance policy exists to protect you from having to wipe out your savings in repair costs when considerable damage occurs.
Making a payment each month when you aren’t filing claims can be daunting and seem like a waste of money when you are on a budget. But, if a case arises where you do need to file a claim, your budget will thank you. Paying for home insurance is actually paying for peace of mind and investing in the protection of your home.
Most mortgage companies require that you maintain a valid home insurance policy, but even if you own your house outright, it is still wise to keep an updated policy.
If you do not own your home, you are not free of home insurance needs. Renters have their own unique concerns when it comes to damage to homes and property because they are not always in control of what happens to a house and how repairs are conducted. Rental home insurance is available to protect your personal belongings and financial assets in liability situations as well.
What Types of Home Insurance Are There?
There are eight different categories of home insurance policies coded as HO-1 through HO-8. The category of insurance you purchase depends on a number of factors, including the type of home you are insuring and the extent of coverage you require. Each of these categories includes three main types of insurance coverage.
Hazard coverage also referred to as dwelling coverage, insures any part of your home that is included or attached to the structure. Some say that if you turned your home upside down, anything that wouldn’t fall out is covered under hazard insurance. Hazard coverage covers the cost to rebuild elements of your home that make it a structure, such as a frame, walls, flooring, and roof, and attached structures, such as a deck or garage.
Personal Property Coverage
Personal property insurance is the section of your home insurance policy that covers your belongings that are inside your home but that are not part of the home. This includes furniture, clothing, appliances, electronics, and more. An average homeowners policy covers up to a certain amount for valuable items or heirlooms. However, if your valuables, such as jewelry or artwork, exceed this set amount, you may need to purchase an additional scheduled personal property endorsement.
Liability coverage protects your assets against damage you are liable for on your property and, in some cases, on others’ property. This includes medical payments for those who may be accidentally injured by you or on your property and damage to personal property that is incurred on your property. Additionally, liability coverage protects your financial assets against lawsuits deriving from damage or injury on your property or sometimes by your family or property, such as children or pets.
What Claims are Typically Covered by Home Insurance?
Not all damage is covered by home insurance. Most basic home insurance plans name specific perils that are covered in their policies. In most cases, damage caused to a home falls under two sources: damage from natural disasters and damage from human involvement.
Most home insurance policies cover damage that is caused by natural elements such as wind and hail damage, accidental fire and fire from a lightning strike, and water damage from a storm or a winter freeze.
Though many people try to file flood insurance claims every year, flood insurance coverage is not technically covered under your home insurance policy. All rising water flood insurance comes from the National Flood Insurance Program managed by FEMA. Though, you can purchase this insurance through private insurance companies, such as your home insurance provider. If you live in a flood plain or want to insure against flooding, ensure that you discuss it specifically with an agent, do not assume it is covered by your standard insurance policy.
Sometimes, homes sustain damage from human involvement, such as a tree removal gone awry, a car driving through a garage door, or a baseball going through a window. In such cases, accidental damage is typically covered under your home insurance policy. Intentional damage by those who live outside of your home, such as theft and vandalism, is covered up to a specific amount as well. Home insurance policies have stated exclusions, though, such as water backups caused by sewage or clog issues and intentional arson, to name a few.
How Much Home Insurance Should I Have?
The amount of home insurance you choose is entirely up to you. It is best to carry coverage in the total amount that it would cost to replace or rebuild your home if a major disaster were to strike. This number includes the cost of materials, construction labor, housing arrangements if you cannot live in the house, and the cost of replacing damaged items within the home.
Each family is different and has different insurance needs. Therefore, before deciding how much home insurance to have, you should take an inventory of all your belongings. Account for an estimate of everything you own and take photos of unique or valuable items. It is also wise to get appraisals for items that require additional policies.
Where Can I Buy Home Insurance?
Hopefully, this quick guide helps to give you an idea of what types of home insurance are available to you and how home insurance policies work. For additional explanations or more specific answers about your circumstances, you should speak with a licensed insurance agent.
At Independent Insurance Brokers Arizona, our expert team ensures that our clients are insured in the proper amounts and for the best price available.
If you have questions about the type of coverage you need or how your credit, claims history, or unique belongings might affect your premiums, we are happy to speak with you. Call us today if you need extra guidance in understanding home insurance in Arizona.