What is homeowners insurance and why do you need it?
Here's a scenario for you: While fleeing a neighbor he has just bitten, your dog knocks over your grill, which starts your deck on fire, a fire that quickly spreads to your house. If you don't have home owners insurance, you could be on the hook for a huge bill.
What is home owners insurance and what does it cover?
Home insurance does just what it says: It insures your home against damage that can be caused by a number of perils. These perils include fire, weather and a host of other things. But home insurance also covers you against other things. It provides liability insurance for situations such as a dog bite or a visitor slipping and falling on your icy sidewalk. Most home policies also offer coverage for damage to the contents of your home and will pay for you to live elsewhere while your home is being repaired or rebuilt.
Who needs it?
Any homeowner needs a homeowners policy. If you have a mortgage on your home, your lender will require the policy. But even if you own the home outright, it's still a good idea to get a home policy. You never know what could happen, and a home is too large an investment to leave unprotected.
How it works?
Typically, if you think you might have a home insurance claim, you contact your agent, who will send out a claims adjuster. Once the adjuster verifies your claim, he or she will make a recommendation, and the insurer will offer you a settlement, which will pay the costs of your claim minus your deductible. If you are unsatisfied with the amount, you can appeal.
What a homeowners policy doesn't cover?
Home policies don't cover floods, and they have a host of other exclusions, so you need to thoroughly read your policy to know what is and isn't covered. You often can cover certain excluded events by adding riders to your policy. Keep in mind, too, that home owners insurance is for people who live in their homes. if you rent out your home, you need different coverage.