What Is Comprehensive Homeowners Insurance?

Definition of "What is comprehensive homeowners insurance?"

You’re researching your options regarding a homeowner’s insurance policy and you’re wondering which to get; there are so many! Then, your real estate agent, a great experienced guy, says: just get the comprehensive homeowners insurance. And you say: ok, but what is comprehensive homeowners insurance?

Comprehensive homeowners insurance is an open perils policy and it’s usually the most expensive type of homeowners insurance because it’s the one closest to being “worry-free” for you. It typically covers all the most common damages such as:

  • fire damage
  • water damage not caused by flooding (which would fall under your Flood Insurance policy)
  • your personal possessions
  • personal liability
  • theft and vandalism

What is the price of comprehensive homeowners insurance?

Of course, the more comprehensive a homeowners insurance is, the more expensive, right? Typically, comprehensive homeowners insurance will be about 15% more expensive than a basic hazard insurance policy.

There are a number of factors that determine the comprehensive homeowners insurance price:

Your history of claims is the first one. Insurance companies keep track of people who have a history of activating their insurance, so it’s best to be cautious with the use. If there’s something you can fix with your own money, do it. If not, if you frequently file claims, your price will rise.

The area in which you live too. For a number of reasons: if your zip code is violent, the risk of theft and vandalism arises, and so does your policy. If your home is far from a fire station, you bet it will reflect on the price you pay. Too close to the dangers of an ocean or a river? Same thing.

And lastly, your personal financial information. Insurers can’t discriminate over race, sex, religion, and disabilities. But they can raise your price if you’re a financial risk to them; that is, if you have a history of defaulting and bad credit.

But because the insurance market is a competitive one, you can (and should) always try to negotiate a better deal. There are countless ways to get a more affordable home insurance; you can bundle up with other types of insurance – with big insurance companies that are not exclusive to home insurance - and get a rate discount, you can shop around and put one quote against the other… but shop around as soon as possible to avoid getting caught in a jam in the event that your insurance company refuses to insure your home.

What are the comprehensive homeowners insurance options?

You have two options concerning comprehensive homeowners insurance: Guaranteed Replacement Cost Coverage & Straight Replacement Cost Coverage.

Guaranteed Replacement is not available everywhere, but is recommended if you can afford it as it pays to rebuild your home even if the amount to rebuild exceeds your policy limit. Meanwhile, Straight Replacement is a cheaper but limited choice. It will pay to rebuild your house in the event that it is destroyed? Yes, it will. However it will only cover costs up to the policy amount - so if you choose this option, make sure to buy enough coverage to rebuild. Construction costs can escalate pretty quickly, so set the bar high!

So, did you understand what is comprehensive homeowners insurance?

If this is your first rodeo and all of this looked foreign to you, take a look at our first-time home buyers guide to home insurance and get experienced real estate agents to guide you through the exciting but complex world of real estate.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Questions

Popular Real Estate Glossary Terms

The meaning of a guarantee covers a legal and financially-binding agreement signed between three parties involved in real estate or financial transactions. In this document, typically ...

Tax-free exchange that allows a seller two years after escrow closes on his former principal personal residence to buy like-kind property and defer taxes. Profits from the sale of a ...

(1) Cash revenue from product sales or services rendered less cash expenses. It is different from accrual earnings. (2) The money available after deducting operating expenses and mortgage ...

House designed and zoned for one-family use. Other dwellings may be attached to a single family dwelling, but do not share the same plumbing, heating, or electrical system. Single family ...

Word, or group of words, that identifies a business or one of its products. The name is registered with U.S. Patent Office and provides legal protection for an indefinite number of renewals ...

In short, an overage means a surplus or an excess of money. An overage can present itself at a property at an auction where the asset has gone over the asking price. Suppose there’s a ...

Privilege of a real estate investor or lender to participate in the profitability generated from property. This is in addition to any principal, interest, or dividends. ...

Market Analysis in the Real Estate Market is basically research done concerning specific properties in relation to the overall current climate of the real estate industry. A good ...

Giving of a promise or guarantee to the receiver to instill confidence. ...