Buying a home means protecting your investment, and one of the most common ways to get that protection is by purchasing insurance. Mortgage companies require it, and having the right insurance policy in place will bring you peace of mind as well as coverage in case something unexpected happens. There are different types of policies available for different types of homes and homeowners. As you look at the various options and begin the process of applying for insurance, you may wonder why some homes qualify for a dwelling policy rather than homeowners insurance. There is a major difference between the two types of coverage that can help you understand.
A dwelling policy covers only the physical structure of the home. A homeowners insurance policy is more comprehensive and covers not only the physical structure but also the contents inside the home. When you have a homeowners insurance policy in place, everything is covered during a catastrophe, from the actual property to the furniture inside it, as well as collectibles, clothing and even the décor. When a catastrophe occurs and a dwelling policy is in place, the insurance company will not cover any of the contents. It will pay to replace the structure of the home, but it will not replace anything you had inside.
A home will qualify for a dwelling policy instead of a homeowners policy if the homeowner is not living in the property itself. If you buy a house that is not your primary residence, you will likely be able to purchase a dwelling policy instead of a homeowners policy. This is most common when property investors buy homes that they will put on the rental market. An investment home does not require a complete homeowners insurance policy. Coverage for the dwelling only is enough because the renters will presumably carry their own renters coverage to protect whatever personal possessions or contents they bring into the home.
If you are buying a house that you plan to live in, a dwelling policy will not be enough. In that case, you will want a full charge homeowners insurance policy to protect you and your family’s appliances, clothing, furniture and other items that you will keep in the house. When you live in the home, you expect coverage for everything you have with you. That’s why a dwelling policy won’t work for the home you use as a primary residence. There is more coverage available to you through the homeowners insurance.
Both types of policies are in place to protect you and your home against fires, floods and unexpected storms and weather. When you have a homeowners policy in place, you’ll also be protected against things like theft and vandalism. If you decide to move out of your home and begin renting it out to tenants, remember to convert from a homeowners insurance policy to a dwelling policy. Each plan covers your investment in different ways.
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