Owning a home costs a lot of money. The mortgage itself eats up a big chunk of your housing budget, but property taxes, furnishings and insurance bump up your monthly financial commitment even more. Homeowners insurance protects your home, which may very well be your largest investment, and gives you a sense of security.
Covers the Home's Structure
A homeowners insurance policy covers the cost to rebuild the home's structure if the damage falls under the scope of the policy. The amount of coverage on the policy determines how much the insurance company will pay toward rebuilding the house, so you want to make sure that amount is accurate. The insurance company should calculate the amount of necessary coverage for you. By insuring the structure of your home, you are protecting yourself financially should damage occur.
Pays to Replace Belongings
A standard home policy also covers your belongings in the event of serious damage. Even if you feel like you don't own much, replacing all your belongings would add up quickly. You need a homeowners policy so you don't have to go without the necessities and luxuries that you have inside your home. Taking an inventory and keeping a list will help you estimate how much coverage you need and will also comes in handy if you have to file a claim. High-value items, such as artwork, antiques and furs, often need a rider to ensure coverage. The rider is simply extra insurance for that specific item attached to the regular policy.
Provides Liability Coverage
You don't intend for anyone to get hurt on your property, but sometimes accidents happen. Your friend can slip on the ice out front and break a bone or your dog could bite the mail carrier. While you hope you never have to worry about these issues, you need to err on the side of caution and protect yourself with the liability coverage afforded by homeowners insurance. The liability portion of the policy covers injuries others sustain on your property.
Fulfills Mortgage Contract
Most homeowners carry a mortgage on their homes. If you are one of those mortgage-carrying homeowners, your contract likely requires a homeowners insurance policy. The lender has a financial stake in your home, which is the reason for requiring insurance. Most companies will place an insurance policy on your home if you don't have your own homeowners policy, so skipping out isn't an option. A policy you find yourself is generally more affordable than what the mortgage company will find for you.
Based in the Midwest, Shelley Frost has been writing parenting and education articles since 2007. Her experience comes from teaching, tutoring and managing educational after school programs. Frost worked in insurance and software testing before becoming a writer. She holds a Bachelor of Arts in elementary education with a reading endorsement.