Homeowners insurance is an all-encompassing type of policy that covers damage to the property as well as liability for occurrences on the property. It is a must-have for anyone who owns a home in New Jersey. Before purchasing a homeowners policy, there is some basic information that every consumer should know the basics of homeowners insurance in New Jersey.

Structure of the home coverage

This part of a homeowners policy pays for the repair or rebuilding of the home and other major structures on the property if it is damaged by a disaster such as fire, hail, lightning, hurricane or another type of calamity that is specifically listed in the policy. It is important to note that homeowner’s policies do not cover damage caused by floods, earthquakes, or the regular wear-and-tear from everyday living.

Personal belongings

Personal items such as furniture, clothing, and sports equipment are covered by homeowners insurance if they are stolen or destroyed in a disaster that is covered by the policy. More expensive items such as jewelry, furs, and fine silverware are also covered, but not at the total valued amount unless additional coverage is purchased.

Liability protection

Liability protection covers the policyholder in the event of a lawsuit someone in the household is involved in due to bodily injury or property damage. This part of the policy also covers any damage that is caused by pets that belong to the homeowner. This part of the policy typically pays for the legal fees that are incurred by the homeowner as well as any monetary awards the court determines the homeowner owes. Extra coverage for the inclusion of instances of slander and libel can be added at an additional cost.

Additional living expenses

If a covered disaster renders the house uninhabitable, this aspect of the policy will pay for costs that come from the inhabitants needing to live elsewhere while the home is repaired. It covers hotel bills, restaurant meals and other living expenses.

Different levels of coverage

Homeowners insurance has three distinct levels of coverage. First is the actual cash value coverage that covers the cash value of the home after the depreciation value is deducted. The second is replacement cost coverage that refers to the actual cash value of the home and does not take into account the depreciation of it. This level of coverage allows the homeowner to rebuild or repair the home back to its original value. Finally, guaranteed replacement cost coverage is the most comprehensive level of homeowner’s insurance. It pays for the entire cost to repair or rebuild the home. It even extends beyond the policy limit if necessary. Insurance companies will generally put a cap of 20-25% over the policy limit, though.

The cost of homeowners insurance

There are many factors that go into determining the amount a homeowner pays for homeowners insurance. First, the amount of coverage a homeowner chooses is a major determining factor of cost. The more coverage a homeowner wants, the higher the cost will be. The zip code where a house is located also plays a role. For example, homes in high-crime areas will have a higher cost for homeowners insurance. Insurance companies consider the size of the home when determining the premium.

Homeowners who have made claims against their homeowner’s policy in the past can expect to pay a higher rate for their insurance policy. Homeowners should be aware that insurance companies will look at a homeowner’s credit rating when determining the premium for coverage. Those with a better credit rating tend to pay less than those with lower credit scores. Other miscellaneous factors that determine cost include the home’s proximity to a fire hydrant, the condition of the home’s plumbing, and the condition of the home’s electrical system. Rates from different companies can vary greatly, so homeowners should comparison shop to get the best value.

Selecting the right insurance company

Often when someone shops for homeowners insurance, they go with the company that offers the lowest price. However, smart shoppers take other factors into consideration as well. It is always a good idea to get recommendations from friends and family. Someone’s personal experience is always a good indication of how the company will treat you in the event a claim needs to be made. Choosing a company that is credible is perhaps more important than choosing a company based on price. Homeowners should research companies to make sure the agents are properly licensed. Another factor to research is the financial health of the company. It is always wise to go with a company that is financially healthy.

Having homeowners insurance is a necessity for New Jersey homeowners. The best way to find the ideal homeowners insurance to fit your needs it to be armed with the basic information that can be applied to your specific situation.

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