What Is Homeowners Insurance?

Our homes are essential pieces of our lives, and if something were to happen to them, it would need to get fixed.

Issues vary from minor fixes to major problems. These major issues can keep some people up at night as they can get extremely costly; this is where homeowners insurance comes in.

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What Is Homeowners Insurance?

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At its core, homeowners insurance is an insurance policy that covers losses and damages to your home and assets in the house. A typical homeowners policy typical covers: - Damages to the exterior of a home - Damages to the interior of a home - Loss or damage to personal assets - Injuries that occur on the property

There are different types of insurance coverages in the US, and depending on which one you choose, it will change the amount you might receive from a claim.

Three Types of Homeowners Insurance

Actual Cash Value

With actual cash value coverage, you'd be covered for the cost (how much you paid) of your home and belonging after accounting for depreciation  (how much the house and belongings are currently worth).

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Replacement value policies are the same as actual cash value except it does not take depreciation into account. This would mean you would be able to receive the amount you originally paid for both your home and possessions.

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Replacement Cost

Guaranteed  (or extended) Replacement Cost/Value

GRC is the most comprehensive type of coverage. This type of coverage will allow you to receive the total cost of repairing or rebuilding your home, even if it's more than your policy limit.

Like most insurance policies, the policyholder pays a premium each month to maintain the policy. The premium paid each month can vary based on many factors. 

How Much is Homeowners Insurance?

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How Does Home Owners Insurance Work?

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Like other insurance policies, homeowners insurance will cover the costs of making any repairs due to covered damages after the deductible has been paid. For example, you can make an insurance claim if you incur water damage or damage from a fire.

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