Homeowners insurance, which might also be called home insurance, is something that most mortgage companies will require you to have when you purchase a home. This kind of insurance gives some protection to your home, as well as your possessions. It also may cover some of the costs in case of personal liability.
Not all homeowners insurance policies will cover exactly the same things. In general, there are two basic parts that all homeowners insurance should have. One part involves property protection, and the other part involves liability protections. You need to make sure that you purchase enough homeowners insurance to actually be useful in covering your home and property.
The property protection section consists of Dwelling, Other Structures, Personal Property, and Loss Of Use. Dwelling covers the cost of rebuilding or repairing your home in the case of damage. It will cover the structure of the home itself, the plumbing, heating, electrical wiring, air conditioning, and built in appliances. It also covers structures attached to your house, (such as a porch). Other structures are covered under the “Other Structures” portion. This covers sheds, garages, driveways, sidewalks, patios, and retaining walls. If damage occurs to any of these things, your homeowners insurance covers the cost of repairing it.
Personal property covers your “stuff”: the things that you, or the other people who live in your home, own. If things are stolen or damaged, your homeowners insurance pays for you to replace the items. Or, they might give you the actual cash value of the items. Loss of Use is the portion of the insurance that will cover your living expenses if you can no longer live in your home. This means that if a disaster occurs, such as a storm, your homeowners insurance will cover the cost of your hotel, restaurant, and other living expenses as your home is being repaired.
Liability Protection is made of two parts: Personal Liability, and Medical Payments. Personal Liability is to protect you if someone else sues you for a bodily injury or property damage to their belongings that occurred on your property. It does not cover instances involving vehicles, or business related incidents. The Medical Payments portion covers the cost of medical expenses of any person who was accidentally injured on your property, (excluding your self, and the family members who live in the home).
Image by pnwra on Flickr