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Insurance Overview: Homeowner’s Insurance
By Molly's Brother | August 4, 2006
This is my second post in my “Insurance Overview” series.
Homeowner’s and renters insurance are incredibly important policies to hold, yet too often, people find themselves dangerously under- or completely uninsured. They don’t discover this, unfortunately, until disaster strikes–which is precisely when the policy is needed the most. This happens, not out of any intent to screw themselves financially, but because the information was too complicated, the topic too dry, and the reality too financially unnerving. I hope these posts provide the basic and necessary information and serve as a starting point in finding which insurance is right for you.
HOMEOWNER’S INSURANCE
Insuring your home is vital to your financial well-being. Also, as your financial situation changes over time, it’s prudent to review your policy from time-to-time, as you might be able to afford better insurance and expand your policy.
Homeowner’s insurance policies generally cover the four areas listed below:
Coverage for Personal Property Usually, your house any extensions, attachments and other buildings on your property are covered if damaged–as is your property inside the house. These items are covered in the event of:
- Fire
- Smoke damage
- Severe weather (hail, lightning, windstorm)
- Explosions
- Riots
- Falling objects
- Planes, trains, and automobiles
- Vandalism
- Theft
- Broken pipes
- Building collapse
It’s important to know that you are NOT automatically covered for floods and earthquakes. These policies are offered as separate entities. Also, make sure your flood or earthquake policy is up-to-date. Get to know it well. Do not assume that you are covered. Always ask the necessary questions regarding coverage.
Liability Protection This protection basically pays for accidental or unintentional injuries that occur while someone is on your property. Depending on the insurer that you have, liability coverage could possibly follow you and apply anywhere in the world. (As always, there are exceptions, so do your research.)
Financial Protection for Other Living Expenses This protection will cover you financially in the event that you might need to incur additional living expenses while your home is being repaired as a result of a covered event.
Other Things to Consider When deciding upon a homeowner’s policy you should always keep the following things in mind:
- Do not assume that an event or a specific item is covered. Ask your agent for clarification.
- Review your policy from time-to-time to make sure that your coverage continues to meet your ever-changing need.
- Be aware that different policies are available for renters and residents of condos and townhouses. Do you research to find out which policy works for you.
My mantra for health insurance applies for homeownership and renting, too: Don’t be caught uninsured. Assess your insurance needs, research your options, and act now. An insurance set-back could take you years to recover financially.
On Monday, please look out for “Insurance Overview: Whole vs. Term Life Insurance,” the third installment in the “Insurance Overview” series.Â
Topics: Insurance |
August 21st, 2006 at 12:58 pm
Correction about your piece on liability coverage. Liability coverage covers you for acts or events where a third party is injured for which you are liable or negligent. In order for your policy to pay for someone tripping and injuring themselves on your property, it must be shown that you failed to DO or NOT do something that contributed to that person injuring themselves on your property. It does not apply for a random injury on your property that you could not control. There is usually a coverage called Medical Payments built into your policy that covers accidental occurences to help pay for that third party’s medical bills. The amount is usually between $1,000 - $5,000. Also, you cannot make a liability claim against your own policy. Sounds dumb, but I get people that do this all the time. One great thing about liability coverage is that your insurance company will represent you if the third party sues you.
August 21st, 2006 at 5:21 pm
Erik–Thanks for the update. In trying to give as clear as an overview as possible, sometimes things aren’t fully explained. I appreciate your help–and your expertise–in providing more details. Thanks.