Homeowner's insurance is insurance that provides financial protection for your home and belongings against disasters. Disasters that are covered by most policies are typically theft, smoke, fire, lightening, hail, frozen pipes, and ice and snow. Most policies exlude acts of war, nuclear accidents, earthquakes, terrorism, floods and poor maintenance. Read your home owner's insurace policy carefully to see which disasters are and are not covered by your plan.
The Structure of the Home
Homeowner's insurance will provide coverage for repairs or replacement of the structure of your home in the event that it is damaged or destroyed by any of the disasters covered by your policy. Typically the structural coverage includes outbuildings like garages and tool sheds in addition to the main home.
Personal Belongings
The items that you keep in your home are usually covered by your homeowner's insurance. This means that if your items are stolen or damaged by one of the covered disasters your policy will reimburse you for their loss. High dollar items that you keep in your home may need additional coverage above and beyond what is provided by a standard policy depending on their value. Read your policy carefully to see if you need to purchase additional coverage for any of your more valuable possessions.
Liability Claims
Most policies provide liability coverage for you and the members of your family including your pets. This coverage typically provides medical payments to third parties, covers legal costs in the event a lawsuit is brought against you, and sometimes will reimburse you for rent that you would have collected if you rent part of your home and are temporarily unable to live in it due to one of the covered disasters.
Money to Live on if You are Unable to Occupy Your Home
Many policies also provide money to cover your living expenses if you are temporarily unable to live in your home due to a covered disaster. This coverage typically pays for hotel costs, meals at restaurants and other vital living expenses.
Lenders require a minimum amount of coverage on a home that is usually equal to the appraised value of the home. While this may be the minimum requirement of the bank, it is a good idea to insure the home for the actual cost of rebuilding it in case it is completely destroyed by a covered disaster.
Just like auto or medical insurance, homeowner's insurance has a deductible. The deductable is the amount of money you must pay out of your pocket toward repairs or replacement before your homeowner's insurance will pay anything. To save money on your monthly premium you can choose to go with a higher deductible. While this means you will have to pay more out of your own pocket up front in the event of a disaster, it also means that you will save money on your monthly premiums in the meantime.
Just like with anything, shopping around for a homeowner's insurance policy is a good idea. However, keep in mind that the lowest price may not always be the best deal. Be sure to compare the policies side by side and make sure that you are getting the coverage you need.