Home is much more than just a place of residence. It is more than the four walls and roof that create the structure. As one of the greatest financial assets around, many homeowners can attest to the great value their homes hold and the lengths they will go through to protect them. While there are a variety of ways to protect a home, purchasing homeowners insurance may offer a relief that is unmatched. As a blanket of security against unforeseen damages and natural disasters, homeowners insurance will provide peace of mind.
What is Homeowners Insurance?
Homeowners insurance is a policy that offers compensation to homeowners if an event covered under the policy damages or destroys the home or personal property. For example, consider a homeowner that has an insurance policy that covers fire damage. If the owner’s home catches on fire, they may use their insurance policy to cover any damages that have been incurred as a result of the fire.
What Does Homeowners Insurance Cover?
Although each policy is unique, homeowners insurance policies typically come in several different types, called policy forms. Policy forms are separated based on the type of coverage that is offered and includes:
- HO-3 Insurance (most popular)
- HO-5 Insurance (broadest coverage)
- HO-1 and HO-2 Insurance (limited coverage)
While a policy with broader coverage provides more security for homes and possessions, limited coverage policies are an inexpensive coverage option that allows homeowners to pay for what they need.
In addition to covering the cost of repairs to your home, homeowners insurance may also cover your possessions and injuries incurred by others on your property. Typically, homeowners insurance policies include six types of coverage:
- Other Structures
- Personal Property
- Additional Living Expenses
- Medical Payments
Although not required, homeowners insurance is a great way to protect your home when tragedy strikes. A homeowner’s insurance policy will minimize the financial burden of repairing the home and the damages that have been incurred. When choosing homeowners insurance, it is imperative that you select a policy that is tailored to your needs. For example, if someone lives in an area close to water, they may want to consider purchasing a policy that includes water damage coverage. The insurance policy will reimburse them when damages occur and provide peace of mind that their investment is protected.