Insuring your Home
Homeowners Insurance, sometimes just called Home Insurance and often abbreviated HOI in the real estate industry, is likely going to be the most important insurance you carry. It protects you financially against damage to your home and personal belongings caused by accidents and disasters. It also covers liability claims and healthcare costs that result from damage or personal injury you or a family member may cause to others on your property.
How much coverage do I need?
Options vary by carrier, but there are typically three options available to you:
Cash Value: Pays out the actual cash value to replace/repair damaged or destroyed property. This is the value "as of today" and will include allowances for depreciation.
Replacement Cost: Pays out the cost to replace/repair damaged or destroyed property. This does not include any deductions for depreciation. The maximum amount that can be paid out is capped at a set limit.
Guaranteed Replacement Cost: Pays out the cost to replace/repair damaged or destroyed property. This does not include any deductions for depreciation. Unlike the Replacement Cost option, this does not have any cap on the maximum that can be paid out. This is not available in all states.