What is Homeowners insurance? Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.
Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.
Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners’ responsibility.
Why do you need homeowners insurance?
It is really all about protecting yourself financially if something unexpected happens to your home or possessions. That’s important because chances are your home is likely one of your largest investments.
If your home was destroyed by fire or damaged by a natural disaster, you’d need money to repair or replace it. If a guest in your home is injured, liability protection and medical coverage help pay expenses.
If you are a victim of theft and vandalism, it can reimburse you for your loss or pay for repairs. If you are still paying for your home, your lender will require insurance.
It is important to know that homeowners insurance is meant to cover unexpected damage, not routine maintenance. Ask your agent to talk about what is covered and be sure to read your policy so you know exactly what’s included and what is not.
The landlord of your apartment may have insurance, but more than likely it only covers the building where you live – not your belongings or your personal liability for accidents. If your possessions are stolen during a break-in or damaged by a fire or severe weather, a renters insurance policy will allow you to recover their value. If someone is injured during an accident in your home, renters insurance will help protect you if you are legally liable and are sued.
You have computers, electronics, jewelry, clothes, furniture. Maybe something particularly valuable like an engagement ring, art collection or musical instrument. Add up the value of all your property, and you’re probably looking at thousands of dollars. Could you afford to replace it all if it were stolen or damaged in a fire?
Maybe you can’t afford to replace it all, but you can insure it — and usually very inexpensively. A renters insurance policy costs less than a dollar a day in many cases. In case of the unexpected, that small daily cost will save you thousands. For particularly valuable items, you can add a personal articles policy to cover it.