Understanding Homeowners Insurance

Do I Really Need Insurance for My Home?

Insurance is your protection against the uncertainties of day-to-day living. For most people, their home is their single most valuable possession- and their biggest investment. Homeowners insurance protects your investment as well as you, the members of your family, and your household possessions.

If you were to suddenly lose your home due to fire or a tornado or have the contents damaged or stolen, you probably could not afford to replace everything all at once. And if somebody sued you for an injury or damage caused by you or your property, the cost of defending that suit could run into thousands of dollars just for legal fees- regardless of the outcome of the suit.

All of these situations are covered by the homeowners package policy. And another reason to carry homeowners insurance is that mortgage lenders require it. No mortgage company will lend the large amounts of money needed to finance homes at today's prices without requiring an insurance policy to protect that investment.

What does homeowners cover?

"Exact" coverage is hard to define because there are different policies and various insurance companies providing homeowners plans. However, all homeowners policies cover two important areas: property and liability.

What this means in insurance terms is that your homeowners policy has two basic components. It covers your structures and possessions- property insurance- and it furnishes protection against personal liability. Personal liability, as its name implies, means you are legally obligated to pay money to another person for actions caused by you, your family, or your property. That liability extends to medical payments to others for injuries caused by you or your family.

What Am I Protected Against?

Remember that policies vary, but homeowners insurance usually covers damage to both structures and personal property caused by:

Fire or lightning Vehicles Windstorm or hail Smoke Explosions Theft or vandalism Riot or civil commotion Falling objects Aircraft Weight of ice, snow or sleet Freezing of a plumbing, heating, air conditioning or other such household system

In fact, your coverage may be more comprehensive than the above list. Many homeowners policies cover damage by just about everything, unless the coverage is specifically excluded. In these cases, it is even more important to understand what is not covered. For example, while most catastrophes are covered, some, such as wind damage from tornadoes, flood and earthquake damage are not covered by a standard policy. Check with your agent about special catastrophic policies for normally excluded conditions like floods and earthquakes.

Is There Anything I Can Do to Lower My Premiums?

There are things you can do to lower your premium. Installing deadbolt locks (to discourage theft), fire extinguishers, smoke alarms, and burglar and fire alarms that alert your local police and fire stations can often save on your premium. Many insurers also offer discounts if you insure both your home and automobile with the same company. Another way to save may be to increase the deductible on your homeowners policy. You may also want to shop around for insurance coverage. Keep in mind, however, that the extent of coverage also determines the premium cost, so the cheapest policy is not necessarily the best. Your insurance agent can help you evaluate the different policies and companies to find the one most suitable for you.