What Is Homeowners Insurance?

Homeowners insurance is a specific form of property insurance. It is designed to cover losses and damages that may occur to a homeowners property. Homeowners insurance can also cover furnishings and other assets within the home. Home insurance can also provide liability coverage in the event an accident happens on the property or in the home.

Homeowners insurance

Typically a standard homeowners insurance policy will cover 4 kinds of incidents on the insured property, such as exterior damage, interior damage, loss or damage of personal assets, and injury that may have happened on the premises. If a claim is made from any of these events, the homeowner will be required to pay a homeowners insurance deductible.

As an example, if a claim is made to a homeowners insurance company for interior water damage in the home. The claim would then be sent to a claims adjuster who would determine the cost to bring the property back to livable condition. If your claim is approved, the owner of the home would be notified of the amount of their deductible. After the deductible is settled the homeowners insurance company would issue a check for the difference. Please always keep in mind, the higher the deductible, the lower your homeowners insurance rate will be. Also, the lower your deductible is, the higher the homeowners insurance rate will be.

Your homeowners insurance policy will have a liability limit. This will determine the amount of coverage you will have if an accident is to happen. Typical limits are usually set around $100,000 but the homeowners insurance policyholder can opt for higher limits if needed. In the event that a claim is made, the liability limit stipulates the percentage amount of the coverage that would go towards replacing and / or repairing damage to the property structures, personal belongings, & costs to live somewhere else if the property needs to be worked on.

Disasters such as earthquakes and flooding are usually not included in a standard homeowners insurance policy. If you are in an area where earthquakes or flooding are common you will need to look into getting specific coverage to cover these disasters. A standard homeowners insurance policy will typically cover disasters such as tornadoes and hurricanes.

Homeowners Insurance & Mortgages

If you have a mortgage on your home, more than likely the lender will require you have homeowners insurance before the loan closes. You have the option of obtaining the coverage yourself or allowing the mortgage company to help you find coverage. Although, we always suggest doing the shopping for your policy yourself. This is always the best way to insure you’re getting the best deal on your homeowners insurance policy. You can compare offers and shop for the best discounts available. 

You will also have the option of including your homeowners insurance payment with your mortgage payment. This can be a condiment way to get all of the bills for your home within one payment every month. Typically it’s paid through an escrow account by the lender. 

Homeowners Insurance vs. Home Warranty

Homeowners insurance and home warranty have a very similar ring to them, although they are different products. A home warranty is a contract that provides coverage for repairs or replacements of home systems and appliances. Some of the items that may be covered under a home warranty can include;

ovens 

water heaters

washers/dryers

pools

Usually these contracts will expire after a 12 month time period and they’re not mandatory like a homeowners insurance policy may be. Home warranties can cover issues & problems that are the result of poor maintenance or inevitable wear-and-tear on items. Some situations in which homeowners insurance does not apply.

Homeowners Insurance vs. Mortgage Insurance

Mortgage insurance and a homeowners insurance policy are also different products. Mortgage insurance (PMI) is insure required by the lender if you put down a down payment of less than 20%. Mortgage insurance is more so coverage for the bank vs the homeowner. The Federal Home Administration typically requires it for homeowners taking out an FHA loan. It’s an extra fee that can be figured into most regular mortgage payments.

If you have additional questions regarding homeowners insurance or would like a free homeowners insurance quote, please give us a call today at 1-209-339-1130