Answers to Tough Questions About Homeowners Insurance

Homeowners Insurance FAQ:

What kind of homeowners insurance do I need?

The type of basic policy you will need varies on the type of dwelling. Renting is also a factor. In most cases, you need coverage to protect your belongings kept inside the structure and protection for the structure itself. Some homeowner policies will give you benefits for an increase in living expenses if you need a temporary residence while the covered residence is being rebuilt from damage.

Homes built for residences

Let's start with buying a standard house dwelling. Remember that individual homeowner insurance policies may vary, but most include coverage for personal property in cases of:

Fire, lightning, windstorms, or hail

Explosions, riots, or civil commotion

Falling objects, aircraft, and vehicles

Accidental smoke damage

Theft, vandalism, or criminal mischief

Sudden or accidental discharge of water or steam from pipes or appliances

Building collapses

Personal liability

Townhouses/Condominiums

Coverage of townhouses and condominiums is slightly different than for regular single-unit residential homes.

Dwellings and other structures

Townhouses and condominiums are covered from damage with some possible exceptions. Some of these exceptions are wear, earth movement, flood, nuclear hazard, and earthquake. Consult your homeowner insurance policy or insurance agent for your specific coverage.

Personal property

Condominium insurance usually covers for your household and personal belongings. This includes appliances, furniture, and clothing.

Loss assessment

You may receive monies from your policy to pay assessments that arise from covered damages. This can be used to pay what you owe for property damages or injury awards that the policy of your association does not cover. Consult your homeowner insurance policy or insurance agent for the specific dollar amounts available.'

Personal Liability

If someone is injured on your property or you damage property belonging to others, you could be held legally responsible. Most condominium and townhouse policies provide coverage for you if this should occur.

Renter Insurance

One type of homeowner insurance available to someone who rents a home, an apartment, or condo is renters insurance. Normally, renter insurance protects you in two ways:

Personal property

As a tenant, a renter policy acts as property insurance. Renter insurance usually covers your household and personal belongings. This includes appliances, furniture and clothing.

Personal liability

If someone is injured on your property or you damage property belonging to others, you could be held legally responsible. Most condominium and townhouse policies provide coverage for you if this should occur.

How are my personal belongings protected?

Many home insurance policies will reimburse you the actual cash value of the items lost or destroyed, minus any depreciation. Some property insurance policies offer the option of insuring for replacement value, but these usually have a higher premium. 

Costs to replace your items may also be covered. This may entail delivery charges, travel expenses, and other costs. Coverage is usually up to a certain dollar amount.

Is insuring the land under my house a wise idea?

Surprisingly, the answer is usually no. Only in rare situations does this make sense to add land coverage in a homeowner insurance policy. Land is not often damaged, per se, but if you live around a factory, energy plant, or other facility that creates materials potentially harmful to the environment, it is worth looking into. 

Though it may seem daunting, purchasing a homeowners insurance policy to cover your specific dwelling or situation is the smartest thing you can do.

More information on homeowners insurance