All About Homeowners Insurance

In This Section:
Tips on buying homeowners and flood insurance.

Everybody who owns a home should get insurance on their property, and everyone who has a mortgage on their home MUST get an insurance policy. The lender will force you to carry a policy that covers fire and hazard insurance in order to protect their investment. In places like Florida you will also be required to take out windstorm insurance (i.e. protection against hurricanes). If you don't take out your own policy, the lender will take one out for you (which will be more expensive than the one you would have gotten) and bill you for it. If you don't pay what they bill you for insurance the lender can foreclose on your home so, the bottom line is that you should shop around and take out your own homeowners insurance.

Homeowners insurance policies are broken into two parts, property protection and liability. The property portion reimburses you for damage to the home and contents. You are not required by lenders to get contents insurance because they don't really care what happens to your stuff inside the house as long as it doesn't devalue the home. The amount of insurance coverage is usually based on the estimated cost of replacing the entire home. The liability portion of the policy covers medical bills that occur as a result of people being injured on the property. For example, if a neighborhood kid trips on your property and breaks his leg or is bitten by your dog you could be held liable. Your liability coverage will protect you against this type of expense.

When shopping for homeowners insurance you should get price quotes from at lest 3 companies. Try online sites like net Quote.

Some insurance companies may give you a price break if you have both your homeowners and auto insurance policies with them. You should inquire about this.

Flood Insurance
One of the most important risk items excluded from most homeowners insurance policies is damage caused by flooding. In some areas that are labeled as being flood zones, the lender will require you to take out an additional flood insurance policy. In some cases you can purchase insurance from the government as part of the National Flood Insurance Program (NFIP).

Windstorm Insurance
Another exclusion in the standard insurance policy is "windstorm" damage. Pay careful attention to the "Hurricane" deductible. This may be a special deductible that is different that your other deductibles in your policy.

Earthquake Insurance
Earthquakes are another risk that are not covered be the standard insurance policy that you would have on the structure of your home. There have been problems with the availability of Earthquake policies. If you have trouble finding an earthquake policy, contact your state insurance commission.