Homeowners’ insurance

What is homeowners’ insurance?

Homeowners’ insurance, also called home insurance, provides financial protection in the event that the homeowner’s house or its contents are damaged. It also provides protection in case the insured or her family are held liable for injuries to other people or damage to their possessions while they are on the property.

Deeper definition

Homeowners typically purchase homeowners’ insurance for two reasons: to protect assets, such as the building structure and the items inside, as well as to protect themselves from personal legal liability or responsibility for injuries to other people or their possessions while they are on the property; and to satisfy mortgage lenders, who typically require homeowners to buy insurance to protect their investment.

Standard coverage includes:

• Dwelling protection, which covers the home and the surrounding structures, such as a garage, toolshed, fence and carport.
• Liability coverage, which pays for damages the insured caused on another person’s property, or injures a person incurred on the policyholder’s property.
• Personal property coverage, which pays for the repair or replacement of items that are damaged or stolen in a covered loss.
• Additional living expenses coverage, also referred to as “loss of use,” which helps pay for temporary relocation and basic living expenditures such as meals if the covered damage forces the homeowner to relocate while it is being repaired.
• Medical payments coverage, which pays for injury treatment for visitors who get hurt while they are in the property. It also covers individuals the homeowner or members of her family accidentally injure while away from home.

Some policies offer additional, optional protection for perils like damage to surrounding vegetation, burst water pipes, or certain passenger vehicles associated with the property. Environmental threats, like floods or earthquakes, are typically not covered unless the homeowner also purchases hazard insurance, which also protects against dangers like nuclear fallout.

Because homeowners’ insurance is a standard part of any mortgage, you’ll want to get the best rate on your mortgage first.

Homeowners’ insurance

David and Amy just bought a house in Cornwall. It’s a rough neighborhood and they want to protect against a number of potential threats. They take out a homeowners’ insurance policy that specifically outlines damage to the home’s structure as well as liability coverage in case someone gets injured while on the property.