An Easy Guide to Understand How Home Insurance Works

Home Insurance

Home insurance is not a luxury; every homeowner needs to have it. Not only does home insurance safeguard your home and belongings from damage and theft, but also proves useful when applying for a loan. All mortgage lenders require the borrower to guarantee the full or average value of the property, which is often the purchase price. They may not issue a loan or facilitate a mortgage transaction without evidence. It is not even necessary to own your house to opt for insurance since many landlords require renters to maintain tenant’s insurance. Home insurance is mandatory whether you want it or not, and Wynn Insurance Agency can help you with this. That said, read on to understand more about how it works.

What Does It Cover?

Household insurance covers plenty of risks. Generally speaking, risk can be categorized as structural, content, and personal damage.

Content Damage

If destroyed as a result of an insured disaster, your clothes, appliances, furniture, and most of the things in your home are covered. You can also get off-premises coverage that will cover many types of theft or damage to your personal belongings while outside of your home. Your insurer may limit the amount of the reimbursement; most companies will provide 50% to 70% coverage of the amount you set on your property.

Interior or Exterior Damage

If there is damage because of fire, lightning, hurricanes, or any other covered emergency, you will be entitled to compensation to get your house repaired or even rebuilt. If you live in an area that is particularly susceptible to climate-related risks, look for insurance products for climate change that can cover your property, should disasters take place. Floods and earthquakes may need a separate type of insurance. Additionally, some areas in your property may need to be covered separately, such as garages, freestanding, or sheds.

Personal Accountability for Injuries or Damage

Liability coverage keeps you protected when others file lawsuits against you. This applies to your pets as well. For example, if your dog happens to bite your neighbor, their medical expenses will be covered. If your little ones break their extravagant vase, your insurance will cover the cost. Even when your neighbor gets hurt from the broken vase and files a lawsuit, you’ll be covered for that too.

Rental While Your House is Repaired

In case your place was burned down to ashes or completely flooded out, you will need somewhere to stay until your house is rebuilt. You will be entitled to receive additional living expenses, including hotel room, meals, and any extra cost you’re subjected to while waiting for your house to be habitable.

Types of Home Insurance

There are three main types of coverage. Actual cash value that covers the cost of your house and belongings after deduction, replacement cost that covers actual cash value without deductions, and guaranteed replacement value that covers everything even if it exceeds your policy limit.


A Home Insurance policy is something every homeowner should have. It provides comprehensive coverage against possible risks of theft and damage. Many homeowners don’t fully understand home insurance policies, so if you want to know how it works, save this guide and get back to it, should a disaster happen.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.