Homeowners insurance is a type of property insurance that offers financial protection for your home and belongings in the case of various covered events. Here’s what it does:

Key Coverages

• Dwelling coverage:
  • Protects the physical structure of your house against damages caused by perils like fire, storms, theft, vandalism, etc.
  • Helps pay for repairs or rebuilding if needed.
• Other structures: Covers detached structures on your property, such as garages, sheds, or fences.
• Personal property:
  • Protects your belongings (furniture, appliances, electronics, clothing, etc.) from theft, damage due to covered perils, or even while away from home.
• Liability protection:
  • Covers legal costs and potential damages if someone is injured on your property or you cause damage to someone else’s property.
  • This can include lawsuits or medical expenses.
• Additional living expenses (ALE):
  • If your home is temporarily uninhabitable due to a covered loss, this helps pay for hotel stays, meals, and other necessary expenses while it’s being repaired.

Typical “Covered Perils”

Most policies cover damages from events like:

• Fire and smoke
• Lightning
• Windstorms and hail
• Theft and vandalism
• Falling objects (like trees)
• Explosions
• Damage from the weight of snow/ice

Important Notes

• Exclusions: Standard policies don’t cover floods or earthquakes. You may need separate policies for those risks.
• Coverage limits: You choose limits for dwelling, belongings, and liability. Make sure they are enough to cover the potential cost of rebuilding your home or replacing your possessions.
• Replacement cost vs. Actual cash value:
  • Replacement cost covers the actual cost of rebuilding/replacing items.
  • Actual cash value factors in depreciation.

Why you need it

Your home is likely your biggest investment. Homeowners insurance provides:

• Financial protection: Avoids devastating financial losses due to unexpected disasters.
• Peace of mind: Knowing you’re covered if something happens.
• Mortgage requirement: Lenders typically require it to get a mortgage.