About 72 million homeowner insurance policies protect American homes. For many people, they bought it because their mortgage company required them to.
But there are so many more reasons to purchase this protective layer of insurance. If you're asking yourself, 'what is homeowners insurance', then you're in luck.
Keep reading to learn everything you need to know about homeowners insurance.
What Is Homeowners Insurance?
Homeowners insurance is a type of property insurance that will protect you from loss if there is damage to your home or assets located within. This insurance will protect you if someone gets hurt while on your property.
Why Do You Need It?
You need this insurance to protect you from financial ruin. You could face expenses well into the thousands if there is damage to your home or belongings, theft, or someone is injured.
If you have a mortgage on your home, your lender may require you to have homeowners insurance as a part of your loan agreement. This is because your house is the collateral that secures their risk of lending you money.
Because of these reasons, you need to purchase insurance as a method of insulating yourself from personal risk.
What a Typical Policy Covers
You need to read your policy details carefully because each policy will offer a specific set of protections. A typical policy will include broad coverage for your home or any other permanent structure on your property.
It will cover damage to your personal property that is located within your home. The damage is specifically outlined in your policy, such as fire or theft.
There will be a limited coverage clause for items like jewelry. Lost jewelry is not covered, but stolen jewelry will be.
Look for a value limitation on this coverage. If you need greater coverage, then look for a policy endorsement that will address your increased coverage needs.
It will cover your personal liability should you face liability due to being the owner of the property.
Finally, it will cover the additional expenses that you incur due to a loss that qualifies for coverage. For example, if your home burns due to a fire and you need to live in a hotel while it's fixed, the hotel expense qualifies for coverage.
What a Typical Policy Doesn't Cover
There are two situations that a standard homeowner's policy won't cover. This is flood and earthquake insurance. These are separate insurance policies. Depending on where you live, it might be a good idea to purchase one of them as a separate and supplemental policy.
Purchase Homeowners Insurance Today
Now that you have a good understanding of the answer to 'what is homeowners insurance' and how it can protect you, it's time for you to buy your policy. Look at the value of your home and the belongings within. This will help you shop for a policy with the right amount of coverage.
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