Homeowners Insurance And What It Covers

Who Needs Homeowners Insurance?Homeowners insurance

Homeowners insurance – often shortened to home insurance or residential insurance – is a must when one is buying or already owns a house. Like health insurance, car insurance, and other such insurance products, home insurance protects you – the homeowner – in the event that your home is damaged or destroyed.  Additionally, most mortgage lenders require that the applicant have a homeowner’s insurance policy in place before approving a loan application.

In short, if you own a home, or you are getting ready to purchase one, you need to protect your property, your investment, and that means purchasing home insurance.

Two Types of Homeowners Insurance

Home insurance breaks down into two types: hazard insurance and liability insurance.  Each covers different things.

Hazard insurance comes into play when there is destruction or damage to your house and / or the contents of the house.  This damage or destruction may be caused by events such as vandalism, robbery or theft, fires, and storms.  The insurance for your home may cover either the replacement value of what was lost or damaged or it may cover only the cash value of the items (in most cases, the older items are worth less, unless they have moved into the antique range).

Liability insurance protects you, as a homeowner, if someone is injured while on your property or in your home.  This is true even if it is their fault that they have been injured.  For example, if your friend’s toddler falls down your stairs, your homeowners liability insurance will protect you and pay for the medical expenses related to the injury, up to the policy limit.

What Home Insurance Does Not Cover

Certain items are not covered by general homeowners insurance, including:

  • Jewelry
  • Cash
  • Business equipment if you have a home-based business
  • Animal attacks or bites if the animal is deemed to be a particular threat or dangerous breed
  • Intentional acts of violence and destruction of the property of another person
  • General wear and tear on your home
  • Earthquakes, mudslides, hurricanes, and floods (however, you are able to purchase separate insurance policies to cover these events)

If you own your own home, or you are getting ready to purchase a residence, you need to purchase homeowners insurance.  It really is that simple.  Like any other insurance, it’s a hedge against a possible future incident (or incidents) and protects you, your family, and your financial stability.  Home insurance is a wise move, always.

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