Homeowners Insurance

Whether you own a home as a primary residence, a vacation home or an investment property, you may need to purchase homeowners insurance. Generally, a mortgage lender will require a homeowner to maintain a home insurance policy for the life of the loan, and the lender typically will have minimum coverage requirements related to the replacement value of the home. This coverage will pay for most or all of the cost to repair or rebuild the home if a loss occurs. A loss event may include a fire, a flood, wind damage, theft or other related events. Some policies specifically exclude some events that are listed in the policy, and others only include coverage for specific listed items. When looking at a policy, ensure that you understand what it covers and what is not covered. This coverage does not insure the land, so the replacement policy is typically in an amount that is lower that the sales price or appraised value of the property.

Many will also choose to purchase a homeowners insurance policy that has a personal property component to it. The personal property coverage will provide reimbursement to the homeowner for furnishings, appliances and other items in the home that are damaged, destroyed, stolen or lost in some other way. Many of these policies also include a liability component, and this is coverage that pays for court costs and other related expenses if another party is injured on the property. Some policies will also pay for the homeowner’s living expenses if displaced due to significant property damage while the home is being repaired or rebuilt.

If you own a home or you are buying a home, take time to learn more about the lender’s insurance requirements as a first step. Then, work with your insurance agent to determine if you will benefit from having additional or optional coverage. You can also make adjustments to your deductible so that it is affordable for you to pay if you do need to file a claim. Through these efforts, you can take steps to protect yourself from loss if your home is damaged or destroyed.