Homeowner's Insurance

What is "homeowner's insurance"?
Homeowner's insurance is an insurance policy that you buy when you own your own home. It'll cover you in case there's any damage to your property, whether from a natural catastrophe or a fire, for instance. It will cover many of your personal possessions if they're lost in a fire, if there's a burglary of some sort, if there's a natural catastrophe like a hurricane that blows things away. Also, homeowner's insurace covers some of your liability exposures if someone slips and falls on your driveway, trips down your stairs, trips over your dog, etc. All of these items are covered under your homeowner's insurance policy.

Do I need homeowner's insurance?
You absolutely need homeowner's insurance. For most people, buying a home is probably the biggest investment they're ever going to make in their lives. If you do not buy homeowner's insurance, you are totally exposed if anything ever happens to that property. If there's a fire, if there's a hurricane, if someone slips and falls and hurts themselves on your property, your assets are totally exposed at that point. Any loss would have to be paid out of your own pocket. If you do have homeowner's insurance, then you transfer a lot of that risk to the homeowner's insurance company. It's critical that you buy homeowner's insurance.

What does homeowner's insurance cover?
Homeowner's insurance covers a fairly wide variety of exposures. Basically, homeowner's insurance will cover the property itself if it's damaged in a fire, or in a natural disaster, such as a hurricane. It will cover you in case you are burglarized and lose personal property that way. Homeowner's insurance will cover you if any individual who may be visiting you is injured on your property, such as slipping on an icy driveway, tripping on your stairs, or tripping over the family dog. In any situation where and individual is hurt and sues you, the homeowner's insurer will step in.

Am I required to have homeowner's insurance?
There's no law that I'm aware of that says a person has to have homeowner's insurance. However, when you apply for a mortgage, most banks will require you to have homeowner's insurance. This is because the bank is making the mortgage using the home itself as the collateral. So if you were to default on your mortgage, they can always resell the property. However, if you do not insure the property, and let's say that it's destroyed in a fire, you have no insurance and can't afford to rebuild it, the bank has lost its collateral. So quite frequently, as a term of getting the mortgage granted to you, you will be required to show proof of insurance.

How do I get homeowner's insurance?
Homeowner's insurance is available to people through a wide variety of distribution channels. You may see an ad on TV with an '0800' number to call, or you maybe able to hookup with an insurance company over the Internet. You may get a piece of direct mail that offers you homeowner's insurance or the route that I prefer is to deal with an insurance agent of some sort. Someone who can walk you through the process, explain to you exactly what's covered and not covered, and if you deal with an independent agent who's an individual who licenses to write for a wide variety of carriers, they can look at your individual needs, and pick out the best carrier to suit them and get it for you at the best price.

How do I determine how much homeowner's insurance I need?
What you need to do is sit down with your agent and go through the value of your property. Essentially, it's the value of your home, how much you think it's going to cost to replace it if the worst happens, for example if it burns to the ground or is blown away in a hurricane. What kinds of personal property you have is also a consideration. Now, people have standard property such as a couch, a TV and things like that and they think, well I'm covered if I just say "Well yeah, I have the standard pieces of property". But you may have special property, for example, Jewelry, furs, fine art, stamp collections, or a baseball card collection. Stuff with a value is a little bit harder to put a dollar figure on and you may have to get an appraisal. All of those factors go into your individualized insurance coverage and those are the types of things that need to be discussed with your agent up front, so they can make sure that there are no gaps in your coverage if the worst happens.

Should I insure my personal possessions?
Many of your personal possessions are insured automatically under your homeowner's policy. For instance, if you lose your couch, if you lose your television, if you lose your dining room table. Those are pretty standard items. If they're lost in a fire, for example, and have to be replaced, you will be able to replace those things at a reasonable cost. However, you should be very aware that if you have any sorts of specialized property that's hard to put a value on - a stamp collection, a baseball card collection, fancy fur, extra-special jewelry - these types of things need to be brought to the attention of the agent and the insurer up front. And you may have to have endorsements, which are additions to coverage, to make sure that these items are adequately appraised, accounted for, and insured under your policy.

What's the difference between home, property and liability insurance?
Home, property, and liability insurance is usually all under the same homeowner's insurance package. They refer to different aspects of the coverage. The home coverage is pretty straightforward. If anything happens to your house, whether the roof is blown off in a hurricane, the tree falls over and damages the garage, the house loses a room, or perhaps the entire property is burned down in a fire; these things are all covered under the home portion of the coverage. There's also a personal property provision in these policies. That can range from very basic things such as your television, your couch, your bed, your dining room table, standard items, to specialized items that you need to get appraised and added on to a policy in an endorsement to make sure they're covered. This would be stuff like a fur, a very fancy piece of jewelry, a stamp or baseball card collection, or fine art, something that's out of the ordinary that you need to get appraised and added to a policy. As far as the liability portion goes, if someone walks by your front yard and you haven't shovelled the snow yet, slips and falls, breaks their leg, they may sue you. If they fall down your stairs, they trip over your dog, or any of these unlikely occurences might lead to a lawsuit in which case the policy would cover you for any legal expenses and if you have to pay any damages to the individual who's been harmed.

What does home insurance property protection cover?
Home insurance property protection is really the most basic portion of the policy. It will cover any damage to the house itself, such as from a fire - if there was a kitchen fire for example, or if the whole house burns down to the ground. Home insurance will protect your house in case of a hurricane, if the roof is blown off for example. It will protect it in case a tree is blown over and smashes into your garage. Any of those types of damage to the home itself will be protected under the home insurance property provision.