A Beginner’s Guide to Homeowners Insurance

Becoming a first-time homebuyer means becoming familiar with topics like mortgage rates and closing costs. As you begin to understand these topics, don’t forget about homeowners insurance, another item that may come up as you go through the homebuying process. While our Home Guides are always happy to answer any questions you may have, round out your financial savviness with this beginner’s guide to homeowners insurance. 

What Is Homeowners Insurance?

Owning a home requires protection, and that's where homeowners insurance comes in. 

Having this type of insurance policy provides you with financial protection against damage to your home and its contents. Homeowners insurance also helps protect you from injury liability or property damage caused by you or your family members. 

How Does Homeowners Insurance Work?

When you purchase a homeowners insurance policy, you pay a premium to an insurance company in exchange for coverage. If you need to file a claim, your insurance provider will then provide compensation for repairs, replacements or other expenses up to the limits of your policy.

What Does Homeowners Insurance Cover?

At a high level, homeowners insurance can cover interior and exterior damage, loss or damage of personal belongings and injury that occurs on your property. This helps protect you and your home from things like fire damage, storms, theft and injuries you’re liable for, like if someone breaks their arm on your property. Depending on your policy, you may get coverage for additional living expenses, such as a hotel stay, that come up if your home becomes uninhabitable due to covered damage. 

What Affects Homeowners Insurance Premiums?

Several factors can influence the cost of your premium, including the location and age of your home, the value of your personal property, your claims history and your coverage options. Location even goes beyond the state or city you live in — it considers things like your home’s proximity to a flood zone or fire station. 

What Are the Different Homeowners Insurance Levels?

There are typically three main levels of coverage: Actual Cash Value (ACV), Replacement Cost Value (RCV) and Guaranteed Replacement Cost (GRC). Each level offers varying degrees of protection. For example, ACV considers how much your items’ values have depreciated, while GRC buffers for inflation to give you the highest level of coverage.

Take the Next Step with Starlight

At Starlight, we provide the option of connecting you with our insurance partners to make the process easy. If you’re looking for a new home and peace of mind, contact one of our Home Guides and schedule an appointment today

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