Homeowner's Insurance: Typical Coverage

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Buying your first house is exciting but requires attention to things you may not have thought about before -- like homeowner's insurance. No lender approves mortgages without homeowner's insurance. Without it, you and your lender are vulnerable to devastating losses. You might still be vulnerable if you don't read your policy's fine print. Work closely with your insurance agent to make sure that you have the coverage you need.

Hazard Insurance

Hazard insurance protects you, your property and your possessions against damage and theft. Check your policy for limitations, but you are usually covered in case of fire, hail, rioting, vandalism or theft. On the other hand, homeowner's policies may not protect you if the damage is due to a rodent infestation, police activity or a flood. Policies can contain limits on specified high-price items, including fine art or jewelry; additional "riders" may be necessary for the coverage of these items.

Liability Insurance

If someone is injured on your property, liability insurance helps to pay their medical bills and any damages claimed in a lawsuit. Liability coverage usually covers things like dog bites, slips and falls or other accidents. Many homeowners' policies do not offer sufficient liability coverage, however, particularly if a person's injuries are severe. Review this portion of your homeowner's policy to make sure that you have the additional liability coverage that you need.

Home Businesses

If you run any kind of business from home, your homeowner's policy likely excludes coverage for business-related property theft or damage and accidents that befall people who are at your house for business purposes. This means that if a thief steals your computer, and the insurance company determines that you use it to keep the books for your business, the insurance company could deny your claim. It also means that if a postal carrier slips on your front steps while delivering inventory, your liability coverage might be moot. Talk to your insurance agent about options; you can add a home business rider to your current policy or choose a specialized policy for home business owners.

Hurricane and Flood Insurance

Homeowner's insurance policies don't usually cover flood damage, so you'll need to acquire a separate policy if you live in an area prone to flooding. The National Flood Insurance Program, or NFIP, provides insurance coverage in communities that meet Federal Emergency Management Agency standards for managing flood plains and storm waters.

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