Your home is likely the largest and most expensive asset you own. It is therefore essential that you protect it in the event of a fire or other unfortunate event. The best way to do this is with a homeowners insurance policy. Many people have questions about this type of coverage, so we have collected answers to some of the most common, below,

Understanding Homeowners Insurance

What does it cover?

Homeowners insurance typically contains several coverage types. Dwelling coverage protects the structure of your home against fire, storm, and falling object damage, along with a few other perils. Personal property coverage pays for losses to your furniture, appliances, and clothes. Personal liability pays for repairs and medical care if you or a member of your household should accidentally injure someone or damage their property.

Is homeowners insurance required by law?

Homeowners insurance is not mandatory in North Carolina. However, if you have an outstanding mortgage balance, your lender can and will insist that you buy enough coverage to protect their interests. Instead of paying only to cover the outstanding loan balance, you should cover the replacement value of the house. That way, you aren't left homeless and without financial recourse if a fire, storm, or other disaster leaves your home uninhabitable.

Why replacement value instead of market value?

Replacement value is the amount it costs to rebuild your home to its current state, while market value is the amount it could sell for. The latter is more subject to abrupt swings in value, so you are more likely to find yourself over- or under-insured. It is a good idea to check with your agent every few years to make sure you are properly insured for the replacement cost of your home.

Which factors affect the price of homeowners insurance?

Homeowners insurance tends to be more expensive for larger and more luxurious homes, however newer homes usually receive more discounts. If you have a pool or trampoline, you may pay more or be declined for coverage because of the insurer's increased risk of liability payouts. The same may be true if you have a large or typically aggressive breed of dog, such as a Rottweiler, pit bull, or German shepherd.  Another reason for increased premiums on your homeowners is claims frequency, so be careful to evaluate all of the consequences before filing small claims.

To have an experienced agent assist you in designing the ideal homeowners insurance policy, contact Zimmerman Insurance Agency, an independent insurance broker in High Point, NC. They have served clients in and around Guilford County since 1963. They also specialize in business, motorcycle, and car insurance. Visit their website to learn more about their services or call (336) 883-6512 to request a homeowners insurance quote.