Purchasing Homeowners Insurance

If you use a lender to finance your home, you will be required to have homeowner’s insurance. You must provide the lender with proof of this insurance policy before the date of closing. While the lender does want to ensure protection of the home investment, it is in your best interest to purchase homeowner’s insurance as well. Homeowner’s insurance covers many aspects of the home that could be expensive if you are required to pay out of pocket.

Protection Types

Homeowner’s insurance protects the home against several things.

1. Casualty. Most commonly insurance protects against fire damage. In the event that your home is destroyed due to a fire, your policy will cover the home. Other hazards are protected with a homeowner’s insurance as well. It is your responsibility to find out what your home is insured against, as well as what it is not insured against.

2. Liability. There is a chance, no matter how minute, that someone could become injured in your home. You can protect yourself from lawsuits in such an unfortunate situation by obtaining liability coverage.

3. Personal Property. When you purchase casualty insurance, it only covers the house structure. Personal property insurance covers the items inside the home. Make sure you are aware of the coverage amount as well as the limits of coverage. Some policies only replace the depreciated value of personal property rather than its replacement cost.