Homeowners insurance is a necessity. It protects your home and possessions against theft and damage. In fact, all mortgage companies require borrowers to have insurance for a fair or total value of a property. Otherwise, they will not issue any loan or financial assistance without any proof. Whether you need a loan or not, it is important to have this kind of protection.

Here is a comprehensive guide on homeowners insurance policies.

Features
Although the insurance is highly customized, the policy has certain elements that show what costs will be covered. These include:

Damage to your house
In the event of a disaster, manmade or natural, like hurricanes, fires, or vandalism, your insurer will provide compensation so that you can repair or rebuild your house. In this policy, your furniture, appliances, clothing, and other important components are covered if they are damaged or destroyed in a disaster.

According to the Insurance Information Institute, most insurance companies will provide up to 70% of the total insurance you have on the property.

Personal liability for injury or damage
This coverage protects against lawsuits filed by others. This clause includes your pets as well. For example, if someone gets injured on your premises or you accidentally damage someone’s property, the insurance company will provide compensation for the medical bills or repair cost.

Additional accommodation
The insurance company also provides compensation for costs, such as hotel expenses, rent, restaurant meals, and other expenditures while you wait for your house to get repaired or rebuilt. However, there is a strict daily and total limit. Of course, you can increase the daily and total limit if you are willing to pay more coverage.

Types of homeowners coverage
All insurances are not created equally. If you go for the cheapest homeowners insurance plan, you will get the least amount of coverage.

In the country, numerous forms of homeowners insurance have become standardized. These insurances are designated HO-1 through HO-8 and offer different levels of protection according to the needs of the homeowners.

Levels of coverage
There are three levels of coverage:

Actual cash value
This coverage covers the cost of property and the value of your possession after deducting depreciation. These possessions can be furniture, appliances, clothing, and décor items.

Replacement cost
This cost covers the actual cash value of your home and belongings without depreciation. This allows you to repair or rebuild your house up to its original value.

Guaranteed replacement cost
In this, the insurer offers an extended replacement, which means it provides more coverage than you originally purchased. However, there is a cap, which is around 25% higher than the limit.

Things to consider
While homeowners insurance covers the majority of losses that could occur, some events are excluded from the policy. These are:

• Act of God
  Here, “Act of God” means natural disasters. If you live in a flood or hurricane area, you want different riders for these types of coverage.
• Maintenance cost
  The cost you incur for maintaining your property is not covered in the insurance policy. If your property gets damaged due to negligence or poor maintenance, the insurance company will not reimburse any amount.
• Act of war
  The damage caused by nuclear hazards or war is not covered by the insurance policy.

Top homeowners insurance companies
Since homeowners insurance is a necessity, many companies are offering it. Here is the list of top players in the industry:

• AAA (American Automobile Association)
• USAA
• Lemonade
• MetLife
• Allstate

Homeowners insurance helps recover and allows you to get back on track if you are stuck with a disaster. Plus, you have the freedom to customize your policy according to your needs.