What is Homeowners Insurance?
Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.
Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.
A standard homeowners insurance policy includes four essential types of coverage. They include:
- 1.) Coverage for the structure of your home.
- 2.) Coverage for your personal belongings.
- 3.) Liability protection.
- 4.) Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured disaster.
The typical homeowners insurance policy covers damage resulting from fire, windstorm, hail, water damage (excluding flooding), riots and explosion as well as other causes of loss, such as theft and the extra cost of living elsewhere which the structure is being repaired or rebuilt.
Many standard perils are covered but there are notable exceptions. The most significant exceptions are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance related problems are the homeowners' responsibility.
Your policy also covers your legal liability (up to policy limits) if you, members of your family or even your pets hurt other people or their property, not just in your house, but away from it, as well.