Real Estate & Area News
Understanding Homeowner Insurance
Homeowner insurance is one of the many complicated and misunderstood elements that must be considered by homeowners. The purpose of homeowner insurance is to protect what will be the biggest and most expensive investment most consumers will ever make. The concept is relatively simple: the homeowner and insurer sign a contract, the homeowner pays monthly premiums and follows other conditions of the contract, then the insurer will reimburse the homeowner if tragedy strikes. What can be confusing, however, is exactly what is covered by a policy and what isn't.
Typical insurance policies for homeowners will cover damage from things like fire, hail, lightning or human-caused mishaps and accidents. What many consumers do not know, however, is that most home insurance plans do not cover damage caused by flooding or earthquakes. These natural disasters do not affect homeowners everywhere and thus coverage is not included in typical insurance plans. If you borrow money to purchase a home in an area where floods or tremors are common, the lender will likely require you to get the applicable coverage in the form of a separate policy.
In addition to covering losses caused by most natural disasters, most home insurance policies will also cover costs incurred while your home is undergoing repairs. This includes accommodations, food, gas and other expenses you have to make as a result of not being at home. Most plans also cover losses incurred as a result of theft or vandalism and damage caused by faulty wiring or plumbing. What many homeowners do not know, however, is that most plans also include liability coverage, in case a homeowner is sued by somebody who was injured on their property. Liability coverage typically includes coverage for legal fees associated with being sued in addition to any rewards the injured party is granted.
If you're buying a home and financing the purchase amount, you will probably not have a choice in whether to get an insurance policy, as nearly all lenders require coverage before issuing a mortgage. Nonetheless, it's a necessary expense for homeowners even after they own their home outright. Many a homeowner in the past has lost his or her home because they didn't have insurance to cover a disaster that leveled it.
April 29, 2014