Homeowner's Insurance

For many people, the most valuable asset is their house. They frequently have tens or hundreds of thousands of dollars in equity in their home, and some homeowners have millions invested in their homes. With so much invested in their homes, few homeowners could afford to replace or rebuild their house if something happened to it. That’s why there’s homeowners insurance. Homeowners insurance offers people who own homes protection from a variety of potential perils. Many policies’ coverages focus on insuring a home against possible risks, but these aren’t the only protections that policies offer. Policies frequently also help safeguard homeowners from certain liability lawsuits and protect homeowners’ personal possessions.

Most people who own a house should have home insurance. Homeowners who have a mortgage on their house are often required by their lender to maintain a minimum level of structural coverage, so the lender’s interest in the home is protected even if the house is destroyed. Even homeowners who own their house outright, however, may still want to carry a homeowners policy. For, few people could afford to replace their home if it was destroyed.

Most home insurance policies are “package policies,” which means they combine several coverages into one, convenient package. The exact coverages that policies provide can vary, but they usually include the following three main protections: Dwelling Coverage, which usually insures the policyholder’s actual home; Personal Property Coverage, which normally insures the policyholder's personal belongings (e.g. small appliances, furniture, clothes, and similar items); and Liability Coverage, which generally offers protection from a variety of potential liability lawsuits that accuse a homeowner of causing injury or damage. In addition to these three primary coverages, policies frequently offer a variety of other coverages as either standard or optional protections. Some other coverages that homeowners might find in policies include: Other Structures Coverage, which may protect fences, sheds, boat houses, and other secondary structures; Loss of Use Coverage, which might pay for alternative lodging if a home is destroyed in a covered incident; Vacant Property Coverage, which may extend coverage to a house that’s vacant for an extended amount of time; and Disasters Coverage, which might provide coverage for additional disasters that normally are excluded from homeowners policies.

Homeowners policies are usually either named perils or open perils policies. Named perils policies generally offer insurance coverage only for the perils specifically named within the policy’s paperwork. Open perils policies normally cover any perils that aren’t specifically excluded within a policy’s paperwork. In general, open perils policies offer protection against more incidents than named perils policies do. There may be a few exceptions, but most open perils policies offer more robust coverage.

Insurers take into account many different factors when calculating homeowners policies’ premiums. A few factors that may impact how much homeowners pay for home insurance are: A homeowner’s past claims history, credit score (in most states). the proximity of a home to a fire station or hydrant, what materials a home is constructed from, what security systems are installed in a home, what other structures are on a property, and the coverages and limits selected by a homeowner.