Home Owners Insurance
Buying a home is a huge purchase, probably one of the biggest purchases most people ever make. Naturally, people want to protect the value of their property. Homeowners insurance is a contract between a homeowner and an insurance company. As long as the owner pays the required premiums and meets the other policy requirements, the insurance company guarantees to reimburse the owner for any losses incurred due to natural disasters or human-caused damage.
Your basic homeowner’s insurance policy covers certain natural disasters such as fire, lightning, wind or hail storms. However, earthquakes and floods are not covered because these disasters are usually specific to certain regions of the country and can cause extreme damage. These policies can, however, be purchased as separate policies. If you live in a flood zone or near an earthquake fault line you may be required by your mortgage company to carry these protections.
Basic policies also cover theft loss and vandalism. It will also provide for something that many people may not normally associate with home protection – liability coverage for lawsuits brought against the owner by people who were injured on the property. This includes the cost of legal defense up to the allowed policy limit. Additionally, most policies will have a provision that will cover the basic medical expenses for the parties.
So, do you need homeowner’s insurance? Just as with your car, most all mortgage companies are going to require that you have adequate homeowners coverage. This is because the investment is almost as big for them as it is for you. They want to make sure the property is protected from major damages so that if you are ever unable to keep up with your payments, the lender can then reclaim ownership and be able to sell it fairly easily. And even if you own your home outright, a good insurance policy is still the best way to protect the value of your home in the face of the unexpected.
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