Details of insurance brand

Buying home insurance for the first time is a process full of questions and unknowns. You've just made a huge investment in your brand new home and haven't put much thought into choosing insurance - let alone, which policies to select.

For a basic overview to get started, look into these levels of essential coverage:

1. Depreciated value
If a large amount of damage occurs to your home and a number of your most prized possessions are involved, then you'll want to be compensated for the money lost during the incident. Under the most basic coverage option for homeowners insurance, you'll be paid back the cash value of the damaged structure of your home and the items inside of it.

However, you're not going to get the top dollar that you paid for these items. Instead, you'll get the value assessed by the insurance company. In essence, you may have paid $10,000, but once you factor in depreciation, you may be rewarded with only $6,000. This may not seem like a square deal because you're probably expecting to at least break even, but this simply is not the case.

Because this type of plan provides the least amount of coverage, it's also cheapest, which is why homeowners on a strict budget select this option.

2. Original value
The next basic level of coverage pertains to damage costs that are not adjusted for depreciation. This means the value of your property will be covered and reimbursed up to the original price you paid for it. This package comes in handy, especially if you have an older home that has lost a lot of its market value over time or if economic factors have drastically reduced your property value.

As long as you have proof of the amount you paid, then insurance providers will match the dollar amount.

3. Extended value
This all-encompassing plan is a valuable investment for those who are willing to pay more each month for home insurance. More so than simply paying for damages, this third level of insurance also extends to cover the repair and replacement costs of property as well. Though you have a certain policy limit that caps the amount of money paid out, under the extended value plan, coverage will continue for as much as 20 percent past the original value of your property in some cases.

Because expenses and fees add up quickly, this policy works well in times of both low and high inflation, thus giving you the additional money you need.

CoverHound can help you find and affordable home insurance plan.

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