When you think about the possibility of your home being seriously damaged or completely destroyed, you may feel stressed about the considerable financial loss that you may incur. You may also be concerned about where you and your family will live and how you will manage to pay to replace all of your lost furniture, appliances, clothes and more. Homeowners insurance can protect you from these and other types of related losses. While this coverage is optional for homeowners who do not have a mortgage, it is required by most mortgage companies.
A typical home insurance policy has several types of coverage included in it. The first type is liability coverage. As a property owner, you may be held responsible if someone visits your home and is injured on your property. You could also be responsible if your dog bites someone or if some other type of event occurs. Liability insurance pays for these expenses, so the benefits are provided to other parties rather than to you.
Another common type home insurance coverage is property coverage. This pays for repair work or a full replacement if your building or any other improvements on the property are damaged by fire, wind and other perils. In some cases, named perils are included or covered. In other cases, all perils are covered except for those that are specifically named as exclusions. You need to understand the type of coverage that you are buying. Some people will add flood, earthquake, mold and other coverages to their policy, but these are not commonly included with a typical policy.
Personal property coverage may also be included in a homeowners insurance policy. With this type of coverage, you may receive compensation or benefits for damaged items inside the home. This could include stolen items as well.
For each coverage type, you will have some flexibility to choose a coverage limit. Any expenses not covered by the policy that you set up are your responsibility to pay for. You also can choose your deductible amount. These factors play a direct role in the premium cost for your policy.