Did you know that 63.7% of Americans owned homes by mid-2017? This is the around the same percentage in 1988. Homes may rising in cost, but just as many Americans purchase homes. Have you just purchased your dream home? Now you need to buy insurance for it. Here are a few things you should know about your home and property insurance.

Policy Exclusions

What does your home insurance policy cover? The last thing you want to hear when you go to file a claim is that your insurance doesn’t actually cover that. For example, most policies don’t cover earthquake and flood damage. To avoid any nasty surprises later, go through your plan with an insurance agent you can trust. They will help you understand the content of the policy document and exactly what it does and does not cover.

When to Stop Paying

If your bank initiates the foreclosure process, continue maintaining your home insurance. If you cancel your coverage, the lender will buy a force-placed policy for your property. Lender-placed insurance costs more than an insurance policy you purchase yourself, so if this happens, reinstate your old policy or get a new one. Present evidence of coverage to your lender, and ask them to discontinue their policy.

Replacement Cost

The replacement cost of a property may differ from its market value. Let’s assume the home insurance on your property covers up to $200,000, but that a disaster happens and in order to repair or replace your home, it’ll cost $250,000. Your insurance won’t cover anything more than $200,000, so you’ll have to take care of the remaining $50,000 yourself. Home insurance policies often cover more than the market value of the property for this reason.

Your Home’s Cash Value

Sometimes a disaster strikes and you choose not to replace your home. In this situation, the insurance company would write you check for the home’s cash value. But how do they know the cash value? They start at the replacement cost of the home, and then deduct the depreciation of the property. The remainder is the cash value. Don’t confuse cash value with replacement cost. Replacement cost stays the same, even as property depreciates over time, so if it’s been 10 years since you purchased your home, your home’s cash value could be tens of thousands of dollars less than the replacement cost.

Liability

If an accident on your property harms other people, you could be found liable. Fortunately, home insurance policies often cover this types of situations. One thing to note, however, is that a force-placed policy covers less than a regular home insurance. It doesn’t provide coverage for your personal property. Creditor-placed policies also don’t offer liability coverage, so if anyone gets hurt, that’s on you. If a lender ever tries to repossess your home (whether through your permission or not), continue making insurance payments so you can guarantee you’re covered for situations like this.

When it comes to insurance policies, being keen is essential. Knowing these five things will help you avoid trouble in the future. After buying home insurance for your property, keep up with payments and you’ll be covered for just about anything—except for those pesky exclusions.