Homeowners, Condo, and Renters Policy Types: The Differences
Homeowner’s Insurance - these policies are for those who own their own home. This could be a house or a condominium. Essentially, if you are making payments on the home with ownership as the end goal, you need homeowners insurance. This type of policy covers the home’s entire structure and its contents. It also covers liability for anyone hurt while on your property and any other buildings on your property. In addition, it covers a majority of natural disasters and allows you to replace or rebuild damaged property. Certain disasters, like floods or earthquakes, may be excluded, but you can add extra coverage for these specific crises. Likewise, suppose a thief breaks into your home and steals items. In that case, your insurance will help replace those items and pay for any damage from vandalism.
Renter’s Insurance - these policies cover the inner contents of the home, apartment, or room you are renting. This includes the case of break-ins, natural disasters, fires, or other circumstances that are beyond your control. Even though your landlord will have a policy on the place you are living, it will not cover your personal items as a renter – making renter’s insurance a vital protection asset.
Another feature of renter’s insurance that many are unaware of is that it covers your personal property when you travel. For example, say you stop in a gas station on your road trip and come back to find your backpack missing with your clothes, laptop, phone, and tablet all inside. While auto insurance has some coverage for these items, renter's insurance would cover them fully.
Condo Policies - This covers everything “studs in.” Essentially, this includes drywall, fixtures, cabinets, countertops, flooring, ceiling, etc. There are also coverages for liability for anyone hurt on your property and your personal property such as clothes, appliances, and furniture. These policies do not, however, cover the home exterior. For this, every condo owner should be aware of their loss assessment coverage.
For example, let’s say a bad storm heavily damages your condo. Your condo owners association has a master policy to cover damages like these. However, most people aren't aware that the deductible can get passed along to the individual owner in addition to potential expenses not covered under the master policy. However, if the damage costs exceed their policy, you are liable for the remaining damages. Adding loss assessment coverage means you wouldn’t have to pay out-of-pocket in this instance, and it is usually inexpensive to add.
Other Considerations for Homeowners
Actual Cost Value vs. Replacement Cost Value
Actual cost value takes into account the depreciation of your items. This means you will likely have to contribute personally to replace any lost or damaged items.
Replacement cost value reimburses you for items without accounting for depreciation. So with this type of coverage, you can replace them brand new.
When considering coverage options, it is best to have replacement cost value protection!
Wind & Hail Deductibles
Oftentimes, your deductible for wind and hail damage is separate from your “all peril” deductible. This means that if you were to submit a hail claim, your out-of-pocket expense could be much higher than your main deductible. This is why it is essential for you to understand these differences in your deductible before disaster strikes.
Water/Sewer Backup & Service Line Coverage
Many believe coverage for water and sewage backing up into your home, and damage done to your service lines (water, sewer, electric, and gas lines) are automatically covered through their home insurance; this is not the case. However, these are simple additions you can add to your policy.
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