Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.*
A standard homeowners insurance policy includes four essential types of coverage. They include:
1. Coverage for the structure of your home.
2. Coverage for your personal belongings.
3. Liability protection.
4. Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.
Many people think that their landlord's homeowner's insurance will cover the loss or damage of their valuables, furniture, etc., however this is misconception. A landlord's insurance most likely just covers the building. So what happens if someone comes into your home and steals your valuables, could you afford to replace them? A renter's policy allows you to insure thousands of dollars worth of property. Many renters' policies also include liability coverage.How much coverage do I need?
The coverage you need is determined by the total value of the possessions in your home. Balance this against your budget, taking into consideration factors that may increase or decrease your home's overall value, such as living in an area that is high risk for natural disasters, credit scores, the type of rental property, etc. The cost also depends on the type of coverage selected:Replacement Cost Coverage vs. Cash value:
You can choose between these two types of coverage depending on your budget.
Replacement cost replaces your home and possessions with new items of equal quality.
The cash replacement replaces home and possessions at cash value, minus the depreciated value.