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What Your Homeowners Insurance May Not Cover

By Compuquotes Team on October 16th, 2009
Homeowners Insurance

What Is a Homeowner's Insurance Policy?

Simply put, a homeowner's policy is an agreement between you and an insurance company to reimburse you for damage to your home, theft of your property, or liability for harming someone else. As long as you pay your premium, the insurance company is obligated to pay you, subject to the provisions of your policy.

The Importance of Homeowner's Insurance

For most people, their home is the family's residence and its biggest asset. Damage or even total loss of your home could be a financial setback that could take you many years to recover from.

Most lenders are so aware of the problems that might result if a home is severely damaged that they insist on borrowers securing homeowner's insurance before funding their home loans. If you don't provide proof of coverage, your lender may buy a policy for you and add the premium to your monthly mortgage payment.

Your Insurance Coverage

These policies provide coverage if your home is damaged or destroyed, for example by storm or fire. You are also covered if certain kinds of property is stolen, usually anywhere in the world, not just from your home. Other provisions protect you if someone is injured while on your property or you or someone else in your family is held liable for injuring another person. Even a bite from your family dog can leave you responsible for someone else's medical bills--your policy covers this.

What Is Not Covered

If a specific coverage is not listed, for instance, for flood damage, it is most likely not provided. Your lender may insist on you obtaining flood insurance if your property is in an area prone to flooding. Many recent floods, however, occurred in areas not previously thought to be flood plains. It may be a good idea to add coverage since flood damage can be very expensive.

Policy Limits

The monetary limits of the coverage you require depends on the value of your house, how much its contents and your other assets are worth, and the amount of liability protection you want. Take into account that it may take much more money to repair or replace your house than when it was originally built or when you purchased it. It is smart to insure for the replacement value of your property rather than just getting enough coverage to satisfy your mortgage lender.

Understand the Terms of Your Insurance Policy

Read your policy, especially the fine print. It will list the specific hazards or perils that are covered as well as the monetary limits of your policy. If you don't understand it completely, call your insurance agent and get an explanation that you are satisfied with. Be sure that any promises made verbally are backed up in writing somewhere in your insurance policy.

Go Online for the Best Rates

Search online and shop for the best policy. Compare provisions and rates side by side to make sure you are getting the most appropriate coverage, from a reliable company, at a fair price.

Visit www.FloodSmart.gov for more information.

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