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Homeowner's Insurance

Insuring Your Property and Household

If you own a home or condominium, you will want to insure your property and household effects by investing in homeowners insurance. Chances are you will already have insurance on your home if you have a mortgage on the property because most lenders make insurance a condition of the loan..

What Does Homeowners insurance Pay For?

  • Homeowners insurance pays claims for damage to your home, garage and other outbuildings; and for loss of furniture and other personal property due to damage or theft, both at home and away from; and homeowners insurance pays for additional living expenses if you rent temporary quarters while your house is being repaired. However, most homeowners policies will not protect you from a flood, a hurricane, or an earthquake loss. You may be able to purchase these coverages by adding an earthquake or flood endorsement to your insurance policy, or through the National Flood Insurance Program (NFIP).

  • Homeowners insurance also includes liability for bodily injury and property damage that you may cause to others through negligence, and for accidents happening in and around your home, as well as away from home, for which you are responsible.

  • It also pays for any injuries occurring in and around your home to persons other than you or your family. Medical payments coverage also pays claims for injuries outside your home that are caused by you, a family member living with you, or by your pet.

  • Homeowners policies generally provide limited coverage for certain money, gold, jewelry, and stamp and coin collections.

When deciding how much insurance coverage to buy, consider the cost and how much you can afford. Assess the cost of replacing your house if it is totally destroyed, and determine the present value of your furniture and personal belongings. Do you want to be fully reimbursed when a loss occurs? Or, for a lower premium would you be willing to accept partial payment for the loss or damage? Remember that buying a higher deductible is another way of decreasing your insurance premium.

Replacement cost coverage pays for the cost of rebuilding your house if it is destroyed by fire or other specified disasters. This coverage will also pay for personal belongings, but usually at an additional premium. Your homeowners policy can also reimburse you on the basis of "actual cash value" only, instead of replacement cost. Actual cash value covers the cost of repairing the damaged property only to its condition just before the loss, or replacing damaged property with a substantially similar item.

For more information on homeowners insurance in your state, you may wish to contact your state insurance regulator.

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