Homeowners insurance is a contract between you and your insurance company, where the insurance company promises to offer financial protection against theft or damage to your home and personal belongings.
While home insurance isn’t mandatory in the eyes of the law, homeowners swear by it.
If you get to secure a new home based on a home loan, the lender needs you to get homeowners insurance as a way to protect the asset. But if you pay for your home without taking out a mortgage, you don’t necessarily have to get your home insured — but it’s a good idea to have anyway. Here’s what home insurance covers:
The dwelling coverage in your policy covers the cost endured while rebuilding or repairing your home after incurring damage by disasters listed in your policy like fire or hurricane. Under this coverage, anything built into the home – the foundation, walls, roof, deck, floors – anything, is covered.
Other Structures Coverage
The other structures coverage pays for repair or rebuilding costs for structures that are a part of your property but separate from your home – the guest house, detached garage, shed, or fences.
Personal Property Coverage
Your home insurance policy also covers your personal belongings, be it in your home or anywhere in the world. The cost of replacing valuables stolen from your home, hotel room, or storage space is covered by the personal poverty coverage. Items like watches, furs, jewelry, and other valuables come with special limits of liability where the insurance company only covers up to a certain amount.
Additional Living Expenses
This policy coverage includes coverage for an increase in living expenses while your damaged property is being repaired or rebuilt. This includes rent for a temporary residence.
Personal Liability Coverage
The personal liability coverage in your homeowner’s insurance pays for any medical bills, lost wages, and other costs to people you are legally responsible for injuring. The events covered under this part of your policy include events like your dog biting someone on your property or a visitor/guest falling and injuring themselves.
The medical payments coverage includes no-fault medical payments that pay up if any of your guests sustain minor injuries on your property, regardless of who is at fault for the accident. You can set the medical payment coverage limit between $1,000 to $5,000.