Basics of Homeowner’s Insurance

Basics of Homeowner’s Insurance

When it comes time to close on your new home, you will need to be prepared to have insurance coverage on your new home. This is a requirement of mortgage lenders because it protects the investment on the end of the homeowner and on the end of the mortgage lender.

If you are a first-time homebuyer, then there are several things that you should know about purchasing homeowner’s insurance before you get into the thick of it. In this article, we will guide you through everything that the homeowner should know before signing their insurance policy.

What is it?

Homeowner’s insurance is pretty simple. In the event of a major loss, homeowner’s insurance covers:

Property repair/replacement: Your insurance policy will help you cover the cost of damage to your home and/or belongings in the event of a covered disaster.

Liability Protection: In the event that someone else is hurt on your property, your homeowner’s insurance will cover the cost of their medical expenses. This also applies to expenses incurred if one of your pets bites or harms someone else.

As you can imagine, the bills from any of these disasters would easily rack up to be rather large. Having homeowner’s insurance protects you from being responsible for these monumental repairs.

Do I need Homeowner’s Insurance?

Put simply, yes. Homeowner’s insurance is not only required by your mortgage company, but it saves you from a major headache in the event of some kind of catastrophic occurrence. Spending a small amount of money each month on your homeowner’s insurance is preferable to having to spend hundreds of thousands of dollars to rebuild a home that you still owe a mortgage on.

Does Homeowner’s Insurance Cover Personal Property?

In the event that your property inside of your home is damaged or destroyed due to a covered event, then your insurance policy will also cover the cost to repair or replace this. There is sometimes a limit associated with this coverage on personal property. If you own a lot of expensive equipment, or jewelry, or even expensive artwork, then you might want to look into getting an additional floater policy written to cover specific property loss in the event of a disaster.

Typical Coverage

Most homeowner’s insurance policies cover the same types of disasters. There are some disasters, such as flooding or earthquakes, that are not covered in your basic insurance. In the event that you would need coverage for those issues, then you would need to have an additional policy.

Fire and lightening are both typically covered in the basic coverage that comes with your policy. It is a good idea to have a video of your personal property because in the event of a total loss fire, it might be hard to prove what you had.

Power Outages are also covered by your initial policy. Typically, this is going to be related to your personal property, but you might also be able to be paid for food that spoils in your refrigerator or freezer during the outage.

Wind and hail are covered under the typical policy. These are also the most common events that result in a family having to file an insurance claim for their home.

Lastly, theft is also covered under your typical policy. If you were to have a home invasion, then you would be covered. Remember, though, that there are limits for these reimbursements written into your policy. If you have a lot of jewelry or expensive electronics, you should consider a floater policy to cover the actual cost.

Final Thoughts

Next to your home, your home insurance is one of the single most important purchases of your life. Your home insurance policy literally protects your livelihood and keeps you from having to pay massive amounts of money in the event of a natural disaster. Although it is something that is easy to forget, it is definitely not something that you should neglect to make sure you take care of. Remember, your home insurance policy is required by your mortgage lender. This is to protect yourself and also to protect the lender in the event of a disaster that wipes your home away.


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