Home Insurance FAQ
Home insurance, also referred to as homeowners insurance or property insurance, provides coverage for homes and compensates the owner in the event of a loss. If the home is burglarized or is partially or destroyed, the policy covers that. Home insurance will replace your belongings, repair the home, or even rebuild.
Home insurance also provides liability coverage which protects the homeowner in the event that someone is injured on the property or is deemed responsible for personal injury or property damage through negligence. Home insurance provides coverage for a range of risks you may face as a homeowner that otherwise can be financially challenging to cover out of pocket. These include property damage, personal property loss, personal liability, or extra living costs.
How Does Home Insurance Work?
Home insurance is a safety net for the home. If the home is damaged or destroyed, it can cost thousands of dollars—even hundreds of thousands of dollars—to repair or rebuild. Without home insurance that money has to come out of pocket. But insured homeowners can file a claim to pay for the damage. Homeowners insurance will also cover theft of personal belongings, inside or outside the home.
In the event someone suffers a loss, whether from burglary, fire, or a severe storm, the insurance agent or insurance company is contacted to begin the claims process. An adjuster will work with the homeowner to assess the damage and determine compensation.
Is Home Insurance Required?
States may or may not require home insurance, but mortgage lenders typically require coverage for them to provide a home loan. Even if the home is owned outright and the owners are not required to buy home insurance, it’s still a good idea to protect the investment with an insurance policy.
Why Is Home Insurance Important?
Home insurance is important for a variety of reasons:
- If the home is insured, repairs or rebuilding after a disaster can be covered by the insurance policy
- Mortgages must be paid even after a home is damaged, unless there is adequate home insurance to help pay for the rebuilding cost
- Mishaps or visitors’ accidents that could lead to personal injury lawsuits can be covered by liability insurance
- When Should I Get Home Insurance?
Home insurance is typically purchased before contacting a mortgage company for a loan. Most mortgage companies will require home insurance in place before giving a home loan. Many factors determine the proper insurance coverage for each home.
How Is Home Insurance Paid?
Payment can be made directly to the insurance company, but there are other options. Mortgage companies typically offer escrow, which allows payment of the home insurance along with the mortgage payment. Insurance payments are placed into an escrow account where they are held by the mortgage company until the annual premium is met.
Where Can I Get Home Insurance?
Searching for home insurance requires an upfront assessment of the total needs of the homeowner for the right amount of coverage. Price alone may not be an adequate determining factor for each individual home. Protecting the homeowners’ investment doesn’t have to break the bank. There are ranges of quotes and options from different insurance providers.