What is Home Insurance?

Home insurance coverage protects your home and personal belongings from damage. Home insurance is a combination of two things — first, protecting your home from fire, theft, and other natural disasters, and secondly, liability coverage in the event someone receives an injury on your property.

For instance, if someone breaks into your home, or if a fire breaks out on your property, you can file a home insurance claim. Your insurance provider will compensate you for the loss, meaning you will not have to pay for the damages out of pocket.

What Does Home Insurance Cover?

Home insurance covers damage due to fire, hail, windstorm, lightning, vandalism, and theft. If you reside in an area where floods or earthquakes are common, you should consider applying for flood or earthquake insurance separately, as a standard home insurance policy does not cover them.

A Standard Home Insurance Policy

A standard home insurance policy covers the following things:

1.    Dwelling Coverage

Dwelling coverage protects the structure of your house, wall-to-wall carpeting, and built-in appliances. It protects the structure of the house and any structure connected to it such as a cellar or garage. If your house sustains damage, your home insurance will pay the costs of repairs and replacement.

2.    Personal Property Coverage

Personal property coverage protects all the personal belongings you have inside your home such as electronic devices and furniture. If they sustain damage or are destroyed, your home insurance will pay for the loss.

3.    Liability Coverage

Liability coverage protects you against potential lawsuits that may arise in the event of a person or guest is injured while on your property. Your home insurance coverage will pay for the loss of income, medical bills and lots more. It will also pay the costs of hiring a lawyer and going to trial in case they file a lawsuit against you.

4.    Loss of Use Coverage

Loss of use coverage protects you in the event you need to move out of your house and into a rental property. If your house sustained damage and is deemed uninhabitable, your home insurance will pay for your living expenses.

Do You Need Home Insurance?

When you buy a new house with your own savings, you aren’t obliged to invest in a home insurance plan since there’s no such law in any state of the US. However, this isn’t the case when you opt for a mortgage loan to buy your dream home.

If you have a mortgage, your lender will require you to obtain necessary coverage for your home, as they have vested interest in your home and want a guarantee from your end that in the event your property sustains damages, they will be covered. There are several options for you to consider. Choose a policy that fits your needs and requirements. In short, home insurance can save you hundreds and thousands of dollars in repairs. You will also be at ease knowing that if an unexpected event happens, you will not have to take out money from your bank account, as your home insurance policy will have you covered.

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