Your home is probably the most valuable asset you will own, so you want to protect it with adequate insurance. The basic homeowner insurance policy covers against damage from thunderstorms, lightning, fire, smoke, burglary, property defacement and vehicle or aircraft damage. More comprehensive policies cover damage by earthquakes, floods, ice, malfunction of heating or air conditioning units. You can add specific riders to your policy if you want. One example is additional coverage for sewer and septic damage.
Condominium owners are typically covered by the association for the structural insurance which will cover the roof, outside and adjoining walls. The condo owner will want to provide an HO-6 policy which will protect them from the "walls in". It is very similar to a renters policy.
There are two types of homeowners insurance:
1- Actual cash value coverage that pays the value of the property or belongings lost, after taking into account depreciation.
2- Replacement cost coverage that will provide enough money to replace lost or damage property with new items at no cost. There are usually replacement cost limits for certain expensive items such as jewelry, artwork or expensive home office equipment.
It helps to have an itemized record of your household contents with values and ideally with pictures. This can help determine their replacement costs. It helps to make a list or a computer disk and keep the list in a firesafe box or a safety deposit box.
Experts suggest that a home be insured for at least 80% of what it would cost to replace everything at the current value. You should review your homeowners insurance every year to make sure you have adequate coverage. If you have made improvements to your home, you may need additional insurance. You always want to consult with a licensed insurance provider before making changes to your homeowners insurance policy.
When you are buying a new home, you will need to purchase a new policy and pay for the first year at or prior to closing. The insurance will be part of your escrow payment for taxes and insurance and the following year, your policy will be paid from your escrow account.
