Do You Know What Homeowners Insurance Covers?
When you purchase a home you will also need to consider homeowners insurance policies. Homeowners insurance is required by most mortgage lenders, and is also a necessary fee when buying a house to protect you financially. This coverage protects you from the costs associated with potential damage to your home or an injury that occurs on your property. Understanding what homeowners insurance policies cover will help you make an informed decision about what coverage you need for your new home.
Dwelling coverage
First and foremost homeowners insurance is in place to protect you from potential damage to your home. There are plenty of damaging situations that could occur while you reside in your home including extreme weather, vandalism and a house fire. This coverage will protect you from having to pay the total cost for repairs out of pocket. Dwelling coverage also covers the cost to rebuild your home in the case of a natural disaster or other home destroying event.
Other Structure Coverage
Homeowners insurance also covers damages that occur to other structures on your property. This includes garages, fences, sheds and other property features that could potentially be damaged. These additional elements of your property are often just as costly to repair or replace, so it's important you get the proper coverage to protect yourself from damages.
Personal Belongings Coverage
Another part of your homeowners insurance is coverage of your personal belongings. This will cover damages to the property inside your home including furniture and clothing. For example if your home experiences a flood that destroys all of your living room furniture, your homeowner’s insurance will cover the cost of the damaged furniture.
Additional Living Expenses (ALE) Coverage
In the event of a natural disaster, or other damaging event that leaves your home uninhabitable, you may need to seek temporary housing. Your homeowners insurance will cover expenses for living in another vicinity while your home is being fixed after it has been damaged or destroyed.
Liability or Bodily Injury Protection Coverage
This part of your homeowners insurance protects you from lawsuits that stem from an event that occurred on your property. For example if someone gets injured on your property and files a lawsuit against you, your homeowners insurance would cover the costs of that lawsuit. This includes lawyer fees, and other settlement fees.
Understanding your homeowners insurance coverage will help you better prepare to own a home. Homeowners insurance is especially important to analyze if you live in an area prone to natural disasters, crime or other factors that increase your risk. Knowing your coverage, and selecting a plan that makes sense for your home could save you from being hit with a large bill in the future.