Homeowners and Renters Insurance
Everyone needs this type of insurance unless they live with someone that has a policy. Homeowners must buy insurance when they get a loan for a home and show proof to their lender.
Homeowners insurance protects you from disasters and provides coverage for the home and everything you have in it. It also covers your liability for injuries or property damage you or your pets cause to other people.
Renters insurance just covers your belongings and your liability. The landlord should carry insurance on the building. Not all landlords require renters insurance, but many put it into the lease agreement.
A standard homeowner's policy will cover most disasters, but you will find exceptions. One exception is for poor maintenance, which is the owner's responsibility. Another exception involves flood and earthquake disasters. These are often carried on a separate policy, which you must purchase in addition to regular insurance.
A standard policy covers four things:
How much coverage do you need? You will need to have enough coverage to pay to rebuild or repair your home in the event of certain disasters. These disasters include:
These policies will also cover outbuildings that are on your property, such as a detached garage or shed.
When considering coverage needs, you will need to account for the cost of rebuilding in today's market, not what it cost when the home was built.
You will also need enough coverage to pay for all of your belongings inside the home. There is usually a standard amount of about half the structural coverage, but you can pay for additional coverage if you have expensive items or more items than the total would cover
For expensive items like jewelry, you may need to purchase special insurance that covers it to its full value. Often this covers the items if they are lost or stolen as well as damaged. They are also covered even if they are off your property.
Liability coverage pays for damages caused by you, your family, or pets to other people. This also includes medical coverage and the cost to defend you in court and any amounts awarded up to the policy limits.
Coverage for living expenses if you cannot reside in your home because of a disaster include cost of rent and living expenses, such as food, while your home is being rebuilt.
Renter's insurance covers everything except the building. It will replace your belongings, cover you for liability, and pay for living expenses if your rental is uninhabitable.
What should you consider when purchasing homeowners/renters insurance?
Renter's insurance is fairly straightforward and you can compare rates with similar coverage. Homeowner's insurance is more complex and there are several policies to choose from. There are limited coverage policies, policies for older homes, and standard policies that cover most disasters.
In addition, you will have some insurance companies that will reduce their rates or raise them based on certain criteria. Your credit rating will affect many policies. In addition, here are some other factors to be aware of:
If you have not yet purchased a home, you may want to consider these features while shopping for one. When looking into insurance, ask about discounts. Many insurance companies will give discounts for special safety measures or based on your age or length of time as a policyholder.