Homeowners insurance is a type of property insurance. Therefore it covers the private residence along with furniture’s, finishing’s & other assets in the house from various losses & damages. Similarly, homeowners’ insurance also provides liability coverage against various accidents on the property. In the long run, it is most advantageous. It provides coverage from internal as well as external damages to the insured properties. Some of the various pros & cons of homeowners’ insurance are pointed hereafter.
Pros of Homeowners insurance:
- Homeowner’s insurance policy covers the entire dwelling of the insured. This includes garages, fences, as well as the deck in the insurance coverage. Similarly, the amount of insurance coverage is calculated by the area & the cost to repair or renew the property which is necessarily not the current market value of the property.
- Under homeowners insurance, there is accidental damage coverage for the guests while they are within the property. This covers various medical expenses incurred for their treatments. Similarly, it also provides personal liability coverage. The insurance covers the insured of legally responsible for any accidental damages.
- If the property is deemed inhabitable, Homeowner’s policy will provide additional living expenses to the insured. For instance, the policy will cover the living expenses of the damaged property by accidental fires or by war. Thus, it provides accommodation to the insured in such cases until the reconstruction of the said property.
- In case of complete destruction of the property, the insurance company is responsible for the remuneration as per the agreement. Hence, it keeps the damages caused to a minimum level for the insured.
Cons of Homeowners insurance:
- There is always a limit to the remuneration paid by the insurance company, despite the policy statement to cover all damage. The insurance company covers the things insured by the policy. Thus one must choose an appropriate policy as per their needs.
- Homeowners’ insurance also comes with some amount of deductible amount in the agreement. A deductible amount is an amount that the policyholder has to pay for the claim. It becomes an extra cost when you purchase the insurance policy.
- The insurance premium can also change as per the location of the insured property. Hence, the cost of the insurance increases as per the probability of damages to the property. As an example, the areas with high theft rates will have a higher interest rate than other places.
- The insurance company intentionally tries to compensate a lower amount. This ensures that the insurance company is in profit. While sometimes the interest rates can be more than the actual valuation of the property at the maturity of the agreement.
Our final thoughts
In conclusion, it is not necessary to have a homeowner’s insurance policy. Most people may think of it as an unnecessary expense. In this case, having homeowners insurance can attract potential tenants and can sometimes also increase the market valuation of the property. Furthermore, it is beneficial to have homeowners insurance for our own financial safety. It also enables us to get mortgages easily if need be.