Homeowners Insurance Basics

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Unfortunate events like fires, tornadoes, and burglary may affect not only your house, but also your financial stability. When you purchase a home, you must protect your investment. Homeowners insurance - is a form of financial defense against a wide range of potential catastrophes.

Protection for your house

The most obvious thing homeowners insurance protects is the structure of the home itself. If your home is damaged or worse yet, destroyed (as subject to policy language) - your Homeowners policy will give you the resources you need to recover. You should be able to replace everything that was lost and rebuild anything that was damaged.

In addition, if your house becomes unlivable due to something that is covered by your policy, your policy will cover additional living expenses that will help you get back on your feet. This usually includes hotel or restaurant bills, up to a specific dollar amount or percentage of coverage.

Protection for your personal property

Homeowners insurance covers the contents of your home like furniture, clothing and appliances. Your homeowners insurance policy defines exactly what is and is not - covered as personal property. It also includes the specific dollar amounts of coverage for specific items. There may be limits and exclusions for certain items.

It's a good idea to take photographs of your possessions even videotape them so you can refer to them in the event of damage or loss. Keep these photos/videos in a safe place, outside of your home. For more information, read our article about making a PDF home inventory checklist.

You may need additional insurance to cover valuable items like jewelry, artwork, furs, silverware, or computer systems, so make sure you know your policy coverage and limits.

Replacement Cost vs. Actual Cash Value

When you're choosing property coverage, one of the most important things you have to decide is whether to get replacement value or actual cash value. The one you choose determines how much you get if your belongings are stolen or damaged.

Most renters policies provide coverage for the Actual Cash Value (ACV) of property at the time it is damaged. ACV is the replacement cost minus a deduction for depreciation depending upon the age of the property. A stereo purchased 10 years ago would be almost worthless today — but if it were destroyed you would still want to replace it.

Most insurance companies offer a Replacement Cost option, where they agree to pay for the full replacement cost of your damaged property up to the amount of insurance you purchase. You should purchase the Replacement Cost option if it's available — and be sure the amount of insurance you purchase is adequate to replace all of your property if it's destroyed.

Defense against disasters

Both floods and earthquakes are excluded under basic Homeowners insurance policies but are available in most areas for an additional premium. Rates vary depending on the location of the home and whether the area is prone to earthquakes or floods. For a competitive Flood insurance quote, call Wells Fargo Insurance at 877-393-5663.

Protection against liability

Your Homeowners insurance will cover you and your family from legal liability for negligence if someone is injured or someone else's personal property is damaged. For example, if someone slips and falls on your stairway, your Homeowners insurance will pay the medical bills and legal costs that could be incurred for any injuries sustained by that person.

In many cases liability coverage will also cover injuries and damages that are caused by your pets, even away from your residence. If your dog bites someone, it's probably covered by your Homeowners insurance.

Protection before and after remodeling

If you're about to embark on a remodeling project, now is a good time to review your Homeowners insurance policy. You'll want to have adequate replacement coverage for any improvements you're making both during and after the period of construction. In addition, you need to make sure you have adequate Liability coverage during remodeling, in case someone on your property is injured during that time. If a contractor is doing work on your property, ask for a certificate of insurance that shows the firm's Workers' Compensation, General Liability, and Automobile Insurance.

Meet your lender's requirements

Mortgage lenders require their customers to have homeowners insurance. If you're purchasing a home, you will need to provide proof of insurance at the time of closing.

How much do I need?

When deciding how much home insurance coverage you need, factor in how much it would cost to rebuild your home and replace its contents if they were destroyed and adjust that amount for inflation as time passes. You should consider the actual cash value vs replacement cash value. See above for more information.

How much does it cost, and how can I get it?

Homeowners insurance premiums are determined based on an individual homeowner's needs. The location of the home, the cost of its construction, and the replacement value of personal property inside the home will all affect the premium.

You can add additional endorsements to your individual homeowners policy to increase coverage for specific types of property, such as jewelry, furs, fine arts, and antiques. Increasing your insurance coverage amounts will generally result in a higher premium.

Consider adding security features like burglar alarms and smoke detectors—these items may make you eligible for discounts. Learn more in our article How to

When you elect to schedule a call, you will leave wellsfargofinancial.com and go to the Wells Fargo Insurance web pages at wellsfargo.com. Wells Fargo Insurance offers a wide range of products from companies with high standards and excellent customer service.

Insurance products are available through Wells Fargo Insurance, Inc. (Minneapolis, Minnesota). Wells Fargo Insurance, Inc. is a licensed agency representing and compensated by the insurer based on the amount of insurance sold. Wells Fargo Insurance, Inc. is an affiliate of Wells Fargo Financial.

  • Insurance is:
  • Not a deposit of or guaranteed by the bank
  • Not insured by the FDIC or any federal government agency