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Learning Center > Property Insurance > Home Insurance Explanation

Homeowners Insurance - Brief Explanation of product

Homeowners insurance, also referred to as property insurance, is insurance that protects your home and personal property against accidents, theft and other damage. Homeowner insurance focuses the structure in which you live, your personal belongings and on you, the homeowner.

In addition to insuring your home and your personal property, home insurance provides you with liability coverage and loss of use of your dwelling during a covered loss.

Many people (and their homes) are woefully underinsured, usually because they simply insure their home to the value required by the lender (mortgage holder or bank). This amount is usually equal to the mortgage balance or loan amount. Others will select a coverage amount based upon the market value without considering the cost to rebuild the home if a total loss were to occur.

When insuring your home, a professional agent or company will calculate the value to replace your home and recommend that you insure the home for that amount. Many companies will offer a replacement guarantee if you insure to the recommended replacement value. This will allow for some difference between the amount you are insured for and the actual loss. For example, if your agent recommends that you insure your home for $200,000 with a replacement guarantee and you have a total loss in which the actual cost to replace your home is $220,000, you will be covered for that amount. Be sure to ask about any limitations to this coverage. Most companies will offer this replacement guarantee with a limit that is about 25% of the insured value. In our example, they would not pay more than $250,000 to replace the home.

Here are some examples of why and when you might need homeowners insurance.

  1. Mortgage companies require that you can insurance to cover the mortgage loan on your home.
  2. Protect yourself from a lawsuit due to an injury that occurs on your property or other areas where you could be held legally liable.
  3. Your home or personal property sustain damage due to a peril that you are insured against.
  4. You are robbed.

Obviously there are many more incidents where home insurance would apply. We recommend that you take full advantage of our home insurance learning center to educate yourself prior to buying a home, building a home, reviewing your insurance coverage, or requesting an insurance quote.

Please feel free to contact us if you have a specific question or concern regarding home insurance.

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