Your credit union can provide you with access to attractive home mortgage
loan options, but before you become a homeowner, you’ll need to
make room in your budget for
homeowner’s insurance. Homeowner’s insurance is an essential safeguard against damage
and theft for your home and belongings.
Types of Coverage
A homeowner’s insurance policy provides coverage for the repair or
rebuilding of your home in the event of
damage due to covered incidents. If an insured disaster occurs that damages the possessions in your home,
your homeowner’s policy should provide reimbursement. Your policy
might also provide personal liability coverage, which protects your family
from legal liability. For example, your policy would pay for damages if
your dog bites your neighbor. Some homeowners also purchase additional
living expenses (ALE) coverage, which covers the cost of temporary housing
in the event the house needs to be extensively repaired or rebuilt.
Levels of Coverage
There are three basic levels of coverage. These levels govern exactly how
much the policy will pay if you file a claim. A better level of coverage
is usually associated with higher premiums, but good coverage is a worthwhile
investment. The barebones level of coverage is actual cash value, which
covers your house and possessions after depreciation is deducted. The
next level up is coverage for the replacement cost, which means you would
be covered for the actual cash value without deducting for depreciation.
The most comprehensive level of coverage is guaranteed or extended replacement
cost or value. This coverage level allows for higher costs due to inflation.
In other words, even if the cost to repair or rebuild your home exceeds
your policy limit, you’ll be fully covered.
Exclusions to Coverage
There are always exclusions to coverage in insurance policies and homeowners
should carefully review these before purchasing a policy. It’s common
for policies to exclude coverage for damage caused by natural disasters
and acts of war. Depending on where you live, it may be wise to purchase
an additional rider for flood coverage or another type of coverage like
GCS Credit Union offers so much more than just secure online banking to
our members. Our credit union in O’Fallon also connects members
to discounted rates and 24/7 claims service with the TruStage Auto &
Home Insurance Program. Call (618) 797-7993 to request more information
about our insurance partners.