ALT="Learning about Homeowner's Insurance Basics, Luke Brown"Anyone buying a home must have knowledge of homeowner’s insurance basics, but questions abound. Today’s article explains many of your questions. As The Insurance Problem Solver, I simplify and clarify insurance issues to take away your confusion or headaches about insurance for your home, life, health, auto, and long-term care.

The good news is you bought a house and have things to insure. The other good news is that you were smart enough to think about insuring it. But you may be a little confused about the process.

Homeowner’s Insurance Basics

If this is your first home and the first time that you’ve dealt with homeowner’s insurance, you probably have questions about it, and a fear of dealing with it. I’m going to take an educated guess that your number-one fear is that you don’t understand why you need it. I’ll even go out on a limb and say that a related concern is what kind you should get.

Therefore, let’s talk basics to calm some of those homeowner’s insurance fears.

What is Homeowner’s Insurance?

Homeowner’s insurance is a kind of insurance policy that is meant to pay for loss or damage to your residence. For a home that you own, homeowner’s insurance can be on the structure (building) or on the structure and certain contents. If you do own the residence, homeowner’s insurance protects the building from damage from causes stated in the policy. If contents coverage is provided, the policy will also pay for the loss or destruction of some personal property. Like other insurance policies, the dollar amount payable, the types of property, and covered causes of loss are stated in the insurance policy, as are explanations of what is not covered. In other words, it doesn’t pay for everything under all circumstances. Some kinds of homeowner’s insurance policies do other things, too (see below).

What’s the best benefit of homeowner’s insurance?

Right off the bat, homeowner’s insurance can cover a wide range of things. Like other insurance, homeowner’s insurance takes risk of loss or damage to your property (your residence, personal property or both) off of you and gives it to an insurance company (subject to the terms of the policy and payment of the premium). Without it, the cost of repair or the value of the lost/damaged property would be on your back.

Does homeowner’s insurance cover guests in my house?

A really neat feature of some homeowner’s insurance policies is this: Suppose you have a guest at your house. Also suppose that he or she sits down in a chair that collapses resulting in your guest breaking a bone. Then suppose that you knew that the chair was in poor condition, but didn’t warn the guest not to sit in it or, worse yet, didn’t replace it with another chair before he or she arrived. What then? You could be accused of negligence (carelessness) in causing your guest’s injury. But do you know what? If you have a certain kind of homeowner’s insurance, the insurance company would step in to handle your guest’s injury claim for you. For example, if you got sued for it, the homeowner’s insurance company would hire an attorney to defend you at its own expense. Best yet, an insurance policy like this would pay the injury claim if it concluded (or a court found) that you were at fault.

Do I have to buy homeowner’s insurance?

In case The Insurance Problem Solver has I have not explained enough about the benefits of homeowner’s insurance, here’s another. Your mortgage lender will probably require it. An important function of homeowner’s insurance is to pay for repairs to the residence. The mortgage lender is concerned with the condition of the property because it loaned you money based upon the residence being in good condition and having a value of at least the amount that it loaned. If you don’t get or maintain it, the lender wants to protect its own financial interest. You will end up paying for it, and it’s more expensive that way.

What if I rent my residence?

Something similar to homeowner’s insurance exists that is called renter’s insurance. Since you do not own the structure in which you live (a rental apartment, a rented house, etc.), you can’t insure the structure. But, you can insure your “stuff” under a renter’s insurance policy. You can usually choose the dollar amount of insurance to buy; the greater the dollar amount of coverage, the greater the premium. Sometimes, the insurance policy will limit the amount that is payable for certain categories of property.

Let me, Luke Brown, know if you have other issues you want to learn about homeowner’s insurance basics. I am here to help!