What is home insurance?
A homeowners insurance policy protects your home by paying a lump sum if your house is damaged or destroyed by fire, weather, theft, or other disasters. Homeowners coverage can also include protection of your personal possessions and yourself. It’s a combined package that offers two types of coverage:
- Coverage against your property being destroyed or damaged by certain perils, including natural disasters and theft
- Coverage for liability exposure – for example, someone being injured on your property
For example, if an unexpected event occurs, such as a fire or burglary, homeowners insurance will help pay for destruction and losses. Additionally, it may also provide liability coverage for accidents that occur on your property.
Most homeowners with a mortgage are required to buy homeowners insurance, but there are different types of home insurance with various types of coverage. Understanding what is and is not covered, and the coverage amounts for the policy’s different components, is crucial before selecting a policy.
What does home insurance cover?
Homeowners insurance coverages vary from state to state and based on the type of policy that you choose. It’s almost impossible to generalize what a typical homeowners policy covers, but some of the more commonly covered perils include the following:
- Fire damage
- Weather-related damage (e.g. wind damage, lightning, or hail)
- Water damage from internal sources
- Damage from civil disturbances
- Damage from motor vehicles or aircraft
Most importantly though, a home insurance policy only covers perils that are specifically listed as covered events in the policy. In other words, if a certain disaster is not listed as a covered event, you will not be able to make a claim should it happen.