What is Home Insurance

What Does Home Insurance Cover?

It’s a common question among homeowners, but you may be afraid to ask: What is home insurance? Also known as homeowners insurance, home insurance is a form of protection that provides reimbursement for damages to the property, legal protection in the event of a claim, and more.

Table of Contents

In this article, you will learn the most frequently-asked questions about home insurance, including:

What is home insurance?
Do I have to have homeowners insurance?
What comes with a homeowners insurance policy?
How can an independent insurance agent help me find the right homeowners insurance policy?

Before we begin, be sure to contact an independent insurance agent when you’re ready to begin exploring your options for homeowners insurance. Independent insurance agents can give you unbiased advice, compare multiple insurers simultaneously, and ultimately provide you with the best coverage that you and your family deserve.

What Is home insurance?

As a basic definition, home insurance is a term insurers use to describe a number of policies that protect those who own a home, protect their valuable possessions, and protect their families.

Also known as homeowners insurance, policyholders pay monthly or yearly premiums in exchange for coverage by an insurance company. In the event that a covered incident occurs, the insurer will pay appropriate coverage after making an assessment of the damage. For some types of coverage, the policyholder must pay a deductible which is an amount that needs to be met first, and that will ensure coverage.

Typical coverages that comes with home insurance policy include:

  • Dwelling coverage
  • Other structures coverage
  • Personal property coverage
  • Personal liability coverage
  • Guest medical protection
  • Additional living expenses (ALE) coverage.

(For more info about homeowners insurance coverages, see “What Comes With A Homeowners Insurance Policy?” below.)

Do I have to have homeowners insurance?

Surprisingly enough, homeowners insurance isn’t a mandatory coverage. If you own your home outright, insurance is optional in most cases.

However, there are several instances that make it more than likely that you’ll need a homeowners insurance policy:

  • If you live in a community that has a HOA, membership usually involves first ensuring your home within coverage limits.
  • Because lenders want to protect their investment, they usually require potential homeowners to first ensure their home before qualifying for a mortgage.
  • For those who own a vacation home or a secondary property, insurers require the primary residence to also be fully insured in order to insure the second property.

The truth is that at least 85% of homeowners in the US have homeowners insurance, and policies cost an average just over $1,000 per year. 

If you’re on the fence about whether you should get a homeowners insurance policy or not, contact the independent insurance agent. They can inform you of potential risk factors that you may not be aware of and how affordable coverage can be. 

What comes with a homeowners insurance policy?

As mentioned previously, homeowners insurance is a number of bundled policies. Let’s take a look at how each coverage is defined for home insurance, as well as common examples of covered incidents.

CoverageDefinitionExamples
Dwelling coveragePays to rebuild or repair the physical structure of your home if it's damaged by a covered peril. This includes attached structures such as a roof or a deck. The amount of dwelling coverage you need is usually calculated by the square footage of your house and what it would cost to rebuild your home. This is not necessarily the market value of your home.An electrical fire burns your kitchen cabinets. Your home is vandalized when you’re on vacation. 
Personal propertyProvides protection for your personal belongings, whether they are damaged or stolen. Bear in mind that you would have to pay a deductible to make a personal property claim.Your jewelry is stolen from your master bedroom. Your television is broken during a party.
Liability protectionProtects you when someone is injured on your property or believes that you committed slander/libel against them. Liability coverage pays for legal defense fees and can pay damages up to your coverage limit if you're found to be liable.A person accuses you of mischaracterizing them in a community newsletter and they subsequently file a claim against you. A delivery person trips on your porch and severely injures their knees.
Other structuresProvides coverage for permanent structures that aren't permanently attached to your home, such as a garage or barn.Your barn’s roof is ruined by a hailstorm. You accidentally back into your carport and need to have it repaired.
Guest medical protectionProvides your guests who are injured on your property with medical protection that pays for their resulting medical bills.Your friend trips down your stairs and requires medical attention. 
Additional living expense (ALE)This coverage provides you with compensation up to your coverage limit for additional expenses if you are unable to live in your home due to a covered loss.Your family has to put its belongings into storage and live at a hotel until your home’s repaired from fire damage.

Of course, these are not the only insurance coverages offered for homeowners. For example, you may be living in an area that is prone to seismic activity, so asking about earthquake insurance through an insurer is a wise decision. Or you may want additional coverage for rental property or special events that you’re holding at your home. Whatever the need, an independent insurance agent can help you find the coverage that you need to keep your family and assets protected.

How can an independent insurance agent help me find the right homeowners insurance policy?

Having an independent insurance agent gives you the expertise to navigate the somewhat complicated world of insurance. Instead of doing the research on your own, agents are able to provide you with up-to-date information and recommendations that take out the guesswork and complexity of finding the right insurance policy. You are able to compare the fine print much quicker with the help of an independent insurance agent, which is typically a laborious process.

Another good reason to use an independent insurance agent is the fact they are not affiliated directly with any insurer. This enables agents to give you a fair assessment of each insurance company, each policy, and more without being sold a policy that’s more expensive or less comprehensive than others. 

Last, because independent insurance agents specialize and provide coverage to a large number of clients, you’re able to ask questions and receive relevant, up-to-date information explained in simple terms that can inform your decision making. For example, if you want to make a side income by subletting your property on Airbnb, an independent insurance agent is able to tell you whether your policy covers this event or if you may need additional coverage.

Find an independent insurance agent in your community here.

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