Page 28 - Book1

Claim Your Insurance Lottery Ticket

XIII

Understanding your homeowners policy

What is homeowners insurance?
Homeowners insurance includes several types of coverage that can
come in handy. It pays to repair or replace your house and other structures on
your property, as well as personal belongings if they’re damaged by an
incident the policy covers, such as a fire or tornado. Homeowners policies
also typically include liability coverage that can pay out when you’re held
responsible for an accident or injury.
Buying homeowners insurance isn’t required by law, but if you have a
mortgage, your lender will likely require you to insure the home to protect its
investment.
Even if you don’t have a mortgage, home insurance is almost always a
wise purchase, giving you both property and liability coverage. These are its
main functions:
● Repair your home, yard and other structures. If your home was leveled
by a severe storm or burned to the ground, homeowners insurance
helps cover reconstruction.
● Repair or replace personal belongings. Many policies cover your
belongings not only inside the house but also when you’re away from
home.
● Cover personal liability issues. If a visitor trips on your walkway and
sues you or your dog bites someone, homeowners insurance can help
cover others’ injuries and your legal costs.

Homeowners insurance policies generally cover destruction and
damage to a residence's interior and exterior, the loss or theft of possessions,
and personal liability for harm to others.
Three basic levels of coverage exist: actual cash value, replacement
cost, and extended replacement cost/value.
Policy rates are largely determined by the insurer's risk that you'll file a
claim; they assess this risk based on past claim history associated with the
home, the neighborhood, and the home's condition.
In shopping for a policy, get quotes from at least five companies, and
definitely check with any insurer you already work with—current clients often
get better deals.

What’s not covered by homeowners insurance?
Even the broadest homeowners insurance policy won’t cover
everything that could possibly go wrong with your home. For example, you
can’t intentionally damage your own house, then expect your insurer to pay
for it. Policies also typically exclude damage from other causes, such as:
● Flooding, including drain and sewer backup.
● Earthquakes, landslides and sinkholes.
● Infestations by birds, vermin, fungus or mold.
● Wear and tear or neglect.
● Nuclear hazard.

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