Insuring Your Home
Banks and mortgage lenders often require homeowners to purchase and pay for insurance along with the mortgage payments. A homeowner's insurance policy provides the protections in the event that your home or property is damaged, and can also help if someone is injured on your property.
Given the wide variety of claims that homeowners can make under their insurance policy, navigating the claim process can be complicated. FindLaw's Insuring Your Home section covers legal and practical information about insuring your home, in addition to suggestions for how to file a claim with your insurer.
Reasons to Purchase Homeowner's Insurance
Even if you're feeling overwhelmed by all of your existing insurance policies — such as auto, health, and life insurance — it's important to protect yourself with some type of homeowner's insurance.
Your home is probably the biggest (and perhaps most important) investment you will ever make, and it's also vulnerable to disasters, burglary, and liability. Therefore, it's vulnerable to potentially expensive emergencies that typically are covered by insurance policies.
What Do Homeowner's Insurance Policies Cover?
Because every house and homeowner has their own unique needs, there is no one-size-fits-all policy for homeowner's insurance (HOI) policies. The types of coverage you purchase may be dictated by your proximity to potential sources of flooding (such as rivers) and risk factors in general. HOI policies may offer the following features and protections:
- Minimum Hazard Insurance - This is the minimum level of protection required by all mortgage lenders (protection against natural disasters, fire, theft, etc.)
- Multiple Lines of Coverage - You may need additional protections not offered in the base policy, such as coverage for a pool or personal property stored in the home
- Liability Insurance - Standard HOI policies cover personal liability for injuries to others that occur on your property
- Personal Property Insurance - Your HOI policy may not cover the individual belongings in your home; you can add coverage for things such as jewelry or valuable art
No matter where you live, your home is probably vulnerable to some type of natural disaster. Most HOI policies do not cover damage from disasters such as hurricanes and earthquakes unless the policy specifically covers these types of events, even though they typically cover wind-related damages, such as those caused by a tornado.
All HOI policies specifically exclude flood-related damage unless you pay more for coverage; If you live in or near a flood zone, you may be required to obtain coverage as a condition of getting a loan. If you live in a high-risk area for earthquakes or other such natural disasters, it may be worthwhile to look into supplemental insurance.
And, believe it or not, some standard policies also cover damage related to volcanoes, like particle matter, ash, shock waves, and lava flow. If you live near an active volcano, perhaps in Hawaii or parts of Washington, you may purchase additional coverage for what the standard policy doesn't cover. In any event, make sure you fully understand the risks in your particular area, find out what the available policies do and do not cover, and plan accordingly.
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