Homeowners insurance protects your finances from home damage. When you purchase a home insurance policy, you are entering into a contract with an insurance company.
You agree to pay your premium to the insurance company in exchange for certain risks. Understanding your home insurance policy can help you better prepare for unforeseen losses and help you feel more confident and comfortable with your coverage if you have to file a claim.
What is Homeowners Insurance?
Homeowners insurance is the financial security that you purchase from an insurance provider. If a covered disaster or other catastrophic event affects your home, it helps to pay for the damage.
A standard insurance policy protects you in several ways:
Home Structures and Furnishings: Home insurance provides financial protection for any home furnishings as well as home structures in the event of a covered event.
Extra living costs: Homeowners insurance usually includes your extra living costs during the repair work – meaning you should stay and eat at the hotel, your policy can cover those extra costs.
Liability protection: An ideal homeowner insurance policy comes with liability protection. This means that if someone is injured while on your property or if you are convicted of damaging someone else’s property, your liability coverage can help cover their costs.
There are many types of homeowners insurance. If you have a mortgage or other type of home loan, you will probably need to carry an HO-3 policy, the most common type of home insurance. The HO-3 policies include, on average:
- Accommodation coverage
- Coverage of other structures
- Private property coverage
- Medical payment
- The cost of extra living
Each policy type brings different covered risks. Understanding what hazards – such as fire, water damage, and theft – are designed to cover your policy is an important step in your financial planning. Policies that cover more risk will usually cost more, but they will give you financial protection from many situations.
How does Homeowners Insurance Work?
Fires, thefts, accidents, these threats can cause you to lose sleep if your homeowners do not have insurance coverage protection. Fortunately, a homeowner’s policy will cover damage to your home and personal property for a variety of reasons (called “hazardous” in insurance parlance). The homeowner’s policy provides part of the personal liability coverage, for example, if your conflicting brother-in-law walks in on a rainy day and injures himself.
[su_box id= “download” title=”Code” style=”glass” radius=”1″]161234[/su_box]