What is Homeowners Insurance, Exactly?

By Compuquotes Team on April 4th, 2008
Homeowners Insurance

Homeowners Insurance protects you financially from the costs of having to rebuild your home in the event of a disaster. However, there are many different types of coverage, and it is important to understand exactly what your policy covers you for.

  • Homeowners Insurance

This type of insurance covers you for the cost of rebuilding your house in the event of a disaster, but it is important to beware, as many policies exclude flood and earthquake damage. Be sure to check all the fine print of your policy to see exactly what is excluded, and what is included. Some home insurance policies only cover the rebuilding costs, so check whether things such as flooring materials and drapes are covered or not before deciding on a policy.

Make sure you take the time to shop around for the best policy for your needs. You might find one company offers you a lower annual premium, but only basic rebuilding costs are covered by the policy. If you paid a little more with another company, you might find that all rebuilding costs are included. It is important to look at the overall package you are getting, and not just the premium amount.

  • Home and Contents Insurance

This type of insurance covers both the cost of rebuilding your house in the event of a disaster, and also any contents contained within the house. It is important that you adequately insure your contents, otherwise you might find the insurance payout will not cover the cost of everything that needs to be replaced. It is better to overestimate slightly on how much it would cost to replace your contents, and pay a slightly higher premium than to be under insured.

As with homeowners insurance, most home and contents policies do not include flood or earthquake damage. However, your home does not have to be damaged in order to make a contents claim. If you are robbed, you are able to submit a claim for the contents alone.

  • Flood Insurance

This policy specifically covers damage caused by flood. Depending on where you live will determine whether or not you will take out this policy along with a standard homeowners insurance policy. It is sometimes possible to add flood insurance to a standard homeowners insurance policy by paying a slightly higher premium, so be sure to ask your insurance company about this option.

  • Earthquake Insurance

Again, this policy is designed to specifically cover damage caused by an earthquake. The area you live in will determine whether you need this type of policy along with your standard homeowners insurance policy.

If you own a home, you need insurance. Life is unpredictable, and you can't guarantee that in the future, something won't happen to destroy your house. Without insurance, the cost of rebuilding is likely to be something that you cannot undertake. The most important thing is to take out the insurance cover that is right for you. Shop around, and make sure you understand exactly what is covered before signing up for any policy.

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