What is a Homeowners Policy?
Homeowners insurance is made up of coverages that may help pay to repair or replace your home and belongings if they are damaged by certain perils, such as fire or theft. It may also help cover costs if you accidentally damage another person's property or if a visitor is injured at your home.
Typical homeowners insurance policies offer coverage for damage caused by fires, lightning strikes, windstorms and hail. But, it's important to know that not all natural disasters are covered by homeowners insurance.
Why Do I Need Homeowners Insurance?
It is mostly required: Homeowners insurance is required by your mortgage lender: While it's not a state requirement like auto insurance, you typically need homeowners insurance if you're financing your house. Home insurance guards your lender's investment from loss or damage caused by covered risks like a fire or vandalism.
Homeowners insurance protects your home from loss: Standard homeowners insurance safeguards your home and unattached structures on your property from a multitude of hazards, including wind damage, fire, vandalism, tornadoes, hurricanes, and thunderstorms. Whether a small portion of your property is damaged or your entire house is leveled, the coverage on your average home policy steps in to help pay for repairs and replacements so you're not left footing the bill.
Home insurance offers peace of mind: With homeowners insurance, you can sleep a little sounder at night knowing that you have a veritable safety net if anything ever happens to your largest investment. Additionally, if most of your home is paid off, you've obviously put a lot of hard-earned cash into it at that point. If something ever happens to your place, your insurer is there to make sure you don't lose any of that hard-sought value you've diligently earned over the years.
What Does Homeowners Insurance Cover?
In general, a homeowners policy will cover your dwelling and other structures on your property as well as personal property and a bit of liability protection.
One of the basic coverages of a homeowners insurance policy is dwelling protection, which helps cover the structure of the home in which you live (e.g. the house's foundation, walls and roof). Dwelling protection may also help cover other structures that are attached to the home, such as a garage or a deck, against certain risks.
Personal Property Protection
Homeowners insurance doesn't just help cover damage to your home. It may also provide coverage for the personal belongings you keep within it. Suppose your electronics are stolen from your home or your furniture is damaged by a fire. Personal property protection may help pay to repair or replace your belongings if they are damaged or destroyed.
A typical homeowners insurance policy provides liability coverage when someone not living with you is injured while on your property. Bodily injury liability coverage may help pay for your resulting legal expenses or the visitor's associated medical bills if you are found at fault. You may be able to increase your liability coverage limits by adding a personal umbrella policy.
What Does Homeowners Insurance Usually Cost?
The average annual homeowners insurance premium is around $1,200, but costs vary widely from state to state and house to house.The costs of homeowners insurance depend on a number of factors, including the coverages you select, features of your home and the value of your personal belongings. There may also be extra costs for additional coverage or increased coverage limits.
It's important to keep in mind that coverages come with limits — the maximum amount your insurance policy will pay toward a covered claim. When selecting your coverage limits, be sure to consider things like the potential cost of rebuilding your home or replacing your belongings. That way, you can be better prepared if your home or belongings are damaged or destroyed by a fire or other covered peril.
Remember that many coverages have deductibles, as well. A deductible is the amount you must pay before your insurance benefits kick in to help reimburse you for a covered claim.
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