Unless you pay cash for your home, your lender will require proof of a homeowner's insurance policy before closing. This policy protects your investment in the home, as well as the lender’s. Homeowners often assume that the coverage required by their lenders is enough. However, you should determine what your personal insurance needs are and make sure they are reflected in your coverage.
Once you have established what you need, you can shop for a competitively priced insurance quote that provides replacement cost coverage for your house and personal property.
What's protected?
Here's a general overview of what homeowner’s policies protect against.
Casualty or hazard: This type of insurance pays for rebuilding or repairing your home should it be destroyed or damaged by specific hazards. The most common hazard covered is fire damage. However, your policy may cover losses due to:
- lightning
- windstorms, hail and explosions
- riot or civil commotion
- damage from vehicles
- sudden and accidental damage from smoke
- vandalism or malicious mischief
- breakage of windows due to theft or accident
Be sure to determine precisely what is and isn't covered, and how it relates to your needs. For example, if your home is in a flood-prone area, you will want to look closely at your policy’s coverage for flood damage. If flooding is not covered, you will need to purchase a separate flood policy.
Liability: This protects you against lawsuits resulting from injuries to any visitors on your property. The cost for this coverage is largely based on the dollar limit of the coverage.
Personal property: Personal property coverage protects what's inside your home. Some items you may want to include in your coverage are:
- jewelry
- computer equipment
- musical instruments
- other particularly valuable possessions
Coverage of personal property varies widely, so be clear on exactly what your policy includes.
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