What Is Homeowners Insurance?
When you purchase a home, whether new or used, you assume a great deal of responsibility. This responsibility includes care of the house, payment of the loan, and accountability to the public. If fire or severe weather damages your house, or if someone is injured on your property and holds you liable, a good policy will protect you.
An insurance policy is an agreement between yourself and the insurance company that spells out each party's obligations and benefits. It specifies exactly what is covered by the policy and what payment is expected in return. If you are going to have a mortgage, the financial institution will require you to have homeowners insurance prior to closing. Also, depending on the location of the property, you may also be required to purchase a flood policy.
When you begin shopping for a homeowners policy, keep a few things in mind:
- There are a lot of insurance companies selling homeowners policies and their pricing can vary a great deal. Get at least three quotes.
- Make sure you compare apples to apples by evaluating similar policies.
- Pay attention to price, limits of liability, and deductibles.
- Compare policy terms and conditions among different companies and evaluate coverage, exclusions, and the reputations of various firms.
- Be certain the company you deal with is solid financially. If you ever have a claim, you'll want to know the company is still in business to pay your claim.
- The insurance company you choose should handle your claims fairly and answer all of your questions as quickly as possible.
If you have questions or need a quote, contact the insurance experts
at 1st Source securely online or by calling
(574) 271-5200 or toll free 800 510-4102.
Types of Coverage
A standard homeowners insurance policy covers:
- The structure of your home -
- This part of the policy pays to repair or rebuild your home if damaged by fire or natural disaster. Protection against floods or earthquakes is not included in the standard policy and must be purchased separately. Make sure you have enough to cover the cost of rebuilding.
- Personal belongings contained in the home -
- Most companies provide coverage of 50% to 75% of the value of your home. For example, if your home is worth $100,000, you could receive from $50,000 to $75,000 to replace personal belongings should they be stolen, lost in a fire, or damaged by natural disaster. Items included are furniture, clothes, and other personal items. Coverage of some belongings, like jewelry and televisions, is limited. You may want to purchase additional coverage for special valuables.
- Liability -
- This provides protection from claims or suits brought against you for accidental damage to someone else’s property or accidental bodily injury to others caused by you, a residence employee, or one of your animals. Liability insurance usually provides $100,000 to $500,000 of coverage but some people feel safer with more.
- Medical -
- In the event a friend or neighbor is injured in your home, they are able to submit their medical bills directly to your insurance company. Coverage limits are usually between $1,000 and $5,000 but will not cover you or your family.
- Additional Living Expenses -
- If your home is damaged and considered uninhabitable until repairs are made, this coverage will provide money for hotel bills, meals and other living expenses. The average policy pays up to 20% of the insured value of the home but additional coverage is available if desired.