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Homeowners Insurance: Key Information You Should Know

Home insurance is essential if you have a mortgage

When you buy a house, lenders require homeowners insurance. If you own your home outright, it isn’t mandatory. However, having home insurance is a wise choice to protect yourself financially in case of costly repairs.

Home insurance does not cover everything

Standard home insurance policies do not cover damages from floods or earthquakes; you’ll need additional coverage to protect against those risks. Riders or endorsements can be added to your policy to provide limited protection for specific perils. It’s crucial to understand what extra coverage you may need to avoid costly repair bills in the event of a disaster. Carefully review your policy or consult your agent about these options, especially if you live in an area prone to floods or earthquakes.

Your policy does not fully cover items within your home

A standard homeowner’s policy has limits on how much your insurer will cover for items in your home, such as furniture, clothing, and electronics. For high-value items, you can purchase additional coverage known as scheduled personal property floaters. These floaters cover the full value of the item, up to the limit specified in the policy.

Homeowners Insurance vs. Home Warranty

When protecting your home, it’s important to understand the difference between homeowners insurance and a home warranty. Both provide valuable coverage, but they serve different purposes.

Homeowners Insurance

Coverage

Protects against damage to your home and personal property due to events like fire, theft, or natural disasters.

Liability Protection

Covers legal expenses if someone is injured on your property.

Required

Often required by lenders when you finance a home.

Deductibles

Typically involves a deductible for claims.

Home Warranty

Coverage

Provides repair or replacement for major home systems (like plumbing, electrical) and appliances (like HVAC, refrigerators) that fail due to normal wear and tear.

Service Calls

Usually includes a small service fee for repairs, rather than a deductible.

Optional

Not required but can be a smart investment for homeowners, especially older homes.

In short, homeowners insurance protects against unexpected damages and liabilities, while a home warranty offers peace of mind for repairs and replacements. Consider both to ensure comprehensive coverage for your home!

What Does Homeowners Insurance Cover?

Homeowners insurance typically covers a broad range of potential damages to your home, other structures on your property, personal belongings, and liability for injuries sustained by others on your premises. Commonly covered events include fire, lightning, high winds, and vandalism. However, coverage can vary significantly between insurance companies and states, so it's essential to read the fine print carefully to understand what is included and what is excluded.