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Home Insurance Basics

Insurance isn't the most scintillating topic. Many people take it for granted and try their best not to think about it. Insurance can conjure up images of the worst possible outcomes: disasters, cataclysms and other nightmare fuel. Like vegetables during childhood, though, insurance can be an uncomfortable subject but it's important to know about what it means and what it can, and can't, do for you.

Of the types of insurance, home insurance is particularly important. Anyone who owns a home knows that it can be a significant investment of time, treasure, and energy. Home insurance protects the investment that your home represents. Even those who don't own their homes are sometimes required by their landlords to buy a policy that provides coverage for the property. There are 3 major elements to understanding home insurance on a basic level: what home insurance provides, the different types of coverage, and what home insurance can cost you. The first section to deal with is what home insurance provides. Let's get started!

What Home Insurance Provides

Home insurance, like any insurance, covers costs. The costs that home insurance cover are related to damage that your home or its contents could incur. Damage to the exterior or interior of your house is covered, as long as the damage is incurred under specific circumstances. If the damage is based on natural disasters like fire, hurricanes, or lightning, depending on your policy, your insurer will compensate you so that you can afford to repair, or even rebuild, your home.

There are natural disasters, however, that are not covered by your insurance and knowing the difference is crucial. Home insurance can also cover damage to your personal belongings. Depending on your policy, your home insurance can cover personal liability for damage or injuries caused by your family or you. Home insurance can provide coverage for situations in which you have to vacate your home because of rebuilding or repair, allowing you to rent another home or stay in a hotel. Home insurance can cover a variety of relevant events and concerns, make sure you find out what your home insurance policy covers so that you'll know to what degree all of this applies to you.

Different Types of Home Insurance Coverage

There are, in essence, three major types of coverage for home insurance. The first type of home insurance is actual cash value. Actual cash value covers the house and its contents while acknowledging the possibly depreciated value. The amount you can expect to receive based from an actual cash value policy is tied to how much the home and its contents are worth currently, not how much you spent on them. The second type of home insurance is replacement cost insurance. Replacement cost home insurance is the opposite, of sorts, of actual cash value insurance: it's based on original value without the influence of depreciation. The last type of home insurance is guaranteed replacement cost. Guaranteed replacement cost home insurance is the most comprehensive type of home insurance and can cover replacing or repairing everything, even beyond your policy's upper limits.

What Home Insurance Costs

Your home insurance costs are going to largely determined by individual factors. Where you live, what type of house you have, and which type of policy you chose to purchase will dictate how much you can expect home insurance policies to cost you. On average in 2008 home insurance premiums were $ 791. That figure, however, really doesn't mean anything on an individual level since so much of your home insurance costs will be dictated by issues like how much violent crime exists in your area and how much coverage you decide to purchase.

Home insurance is a crucial part of protecting you from the dangers that your home, your property, and your family can face (or create.) Keep in mind that these are just the basics of home insurance. As always, do your own research when thinking about home insurance and purchasing it. Good luck and keep your home and your family safe!

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