Frequently Asked Questions About Homeowners Insurance What is homeowners insurance?
What is in a standard homeowners insurance policy?
Are there different types of policies?
What type of insurance do I need for a co-op or condo?
What type of disasters are covered?
Can I own a home without homeowners insurance?
How do I take a home inventory and why?
How much homeowners insurance do I need?
What is homeowners insurance? Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it. Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets. Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners' responsibility. What is in a standard homeowners insurance policy? Generally, speaking a standard homeowners insurance policy includes four essential types of coverage. They include:
Are there different types of policies? Yes. A person who owns his or her home would have a different policy from someone who rents. Policies also differ on the amount of insurance coverage provided. The different types of homeowners policies are fairly standard throughout the country. However, individual states and companies may offer policies that are slightly different or go by other names such as “standard” or “deluxe”. The one exception is the state of Texas, where policies vary somewhat from policies in other states. What type of insurance do I need for a co-op or condo? If you have purchased a condo or co-op, the bank will require insurance to protect its investment in your home. You may, however, need more insurance to cover your personal items, liability or fees that may be charged to you regarding shared areas of the building like the lobby. You will need two separate policies to protect your investment:
What type of disasters are covered? Most homeowners policies cover all disasters listed below, but it is safer to check with your insurance company.
Can I own a home without homeowners insurance? Unlike driving a car, you can legally own a home without homeowners insurance. But, if you have bought your home and financed the purchase with a mortgage, your lender will most likely require you to get homeowners insurance coverage. That’s because lenders need to protect their investment in your home in case your house burns down or is badly damaged by a storm, tornado or other disaster. If you live in an area likely to flood, the bank will also require you to purchase flood insurance. Some financial institutions may also require earthquake coverage if you live in a region vulnerable to earthquakes. If you buy a co-op or condominium, your board will probably require you to buy homeowners insurance. After your mortgage is paid off, no one will force you to buy homeowners insurance. But it doesn’t make sense to cancel your policy and risk losing what you’ve invested in your home. How do I take a home inventory and why? Would you be able to remember all the possessions you’ve accumulated over the years if they were destroyed by a fire? Having an up-to-date home inventory will help you get your insurance claim settled faster, verify losses for your income tax return and help you purchase the correct amount of insurance. Start by making a list of your possessions, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have. For clothing, count the items you own by category like pants, coats, shoes, for making notes about those that are especially valuable. For major appliance and electronic equipment, record their serial numbers usually found on the back or bottom. How much homeowners insurance do I need? You need enough insurance to cover the following:
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