You worked hard to get your home and belongings and you need to protect them against loss. A fire or windstorm can destroy a room or take off a roof. A neighborhood kid who falls off your porch can run up medical bills. Insurance is the protection against these sorts of damages. You need two types, property insurance on your home and your belongings and general liability insurance to cover you from damages in case of accidents or events which hurt or damage a third party.
Property and liability insurance generally are combined in what's called a homeowners policy. A homeowners policy covers your home and its contents against damage from fire, storms and most accidents or disasters except floods and earthquakes. It also covers injury or damage caused by you or members of your household or accidents to others on your property.
A typical homeowners policy will pay to repair or rebuild your house if it is damaged or destroyed. It also will pay for garages, gazebos and related structures, although generally only up to about 10 percent of the value of your home. It also will cover your personal belongings against damage or loss from theft, usually based on a percentage of the house value. There are limits on furs, jewelry and silverware, so you might need extra insurance for these items if you own a lot of expensive items.
Liability insurance covers you from loss or claims resulting from damage or accidents to others in and around your house. A neighbor kid falling off a swing, a salesman tripping over a rock or a tree limb falling on a neighbor's porch are examples of liability claims. Homeowners liability coverage usually covers about $100,000 in damages, but you might want to buy extra coverage, especially if you're in an area where jury damage awards tend to be high.
You can buy separate property and liability policies, either as supplements to or replacements for umbrella homeowners policies. You'll have to buy separate policies if you are in a flood or earthquake zone, because these natural disasters are excluded from standard homeowner policies. If you're in California, for instance, get earthquake insurance; people in Florida buy flood or hurricane insurance.
You don't have to own a home to get homeowners insurance. All major companies provide similar coverage as renter insurance. Renter insurance will provide personal property and liability coverage but not cover the rented structure. Talk to your landlord, though, about what type of insurance he carries to make sure you are protected.
Property, liability and all homeowner insurance include some deductible. You pay the first $500 of any loss or claim, for instance. You can lower your rates by increasing your deductible to the highest amount you can easily afford to pay. Lowering the deductible may be a good idea if you're in a high-risk area likely to have more claims.
- Insurance Information Institute: What Is Homeowners Insurance?
- Insurance Information Institute: What Coverage isIincluded in a Standard Homeowners Insurance Policy?
- USA.gov: 12 Ways to Lower Your Homeowners Insurance Cost
- USA.gov: Homeowner and Renter's Insurance
- The Money Alert: How Much Personal Liability Insurance Do You Need?
- Wealth Pilgrim: What Is Personal Liability Insurance?
Bob Haring has been a news writer and editor for more than 50 years, mostly with the Associated Press and then as executive editor of the Tulsa, Okla. "World." Since retiring he has written freelance stories and a weekly computer security column. Haring holds a Bachelor of Journalism from the University of Missouri.