Articles and Advice
Buying a house involves a myriad of elements that the average first-time homebuyer is quite unfamiliar with. One critical decision that buyers need to make is whether they need to purchase homeowner's insurance. Though many men and women have a general understanding of what a homeowner's insurance policy is, some do not fully understand what this protection plan covers and why it's necessary. Here is a quick overview detailing the basics of homeowner's insurance.
Simply put, homeowner's insurance is property insurance that protects the structure, some furnishings, and people in the event of damages or accidents.
Homeowner's insurance generally will cover damages to the exterior and interior of your home, damage or destruction of personal property, and any injuries that occur on your property. Like car insurance, when you file a claim after an incident occurs, you'll pay a deductible. Keep in mind that certain incidents are traditionally not covered by homeowner's insurance, including damages stemming from "acts of God" or "acts of war". For example, flood damage is typically not covered by homeowner's insurance, however, you can take out a separate flood insurance policy to protect your home.
Homeowner's insurance is not legally required in most states. While policies like car insurance are often mandatory to own or lease a vehicle, you can legally purchase a home without purchasing a homeowner's insurance policy. However, if you plan on financing your home purchase, your lender will likely require that you purchase some form of homeowner's insurance. When you're buying a house with help from a mortgage lender, they technically own the house as well and will want to protect their investment.
Is Homeowner's Insurance the Same as a Home Warranty?
No, a home warranty and a homeowner's insurance policy are not the same. A home warranty is a separate, optional policy that protects other aspects of your home. A home warranty covers the systems and appliances in your home if they break down. A home warranty may cover:
Even if you're buying a house in cash without additional financing, a homeowner's insurance policy is a wise investment. If a catastrophic event completely ruins your home, you'd be responsible for rebuilding the home and replacing your assets if you are not covered under a homeowner's insurance policy. These policies also protect you in the event that someone, even a visitor or service repair professional, gets injured while on your property. Homeowner's insurance gives you peace of mind against the unknown accidents that could put you, your family, and your finances in jeopardy.
There is a range of coverage options available for homeowners of all needs. Many policy providers will customize a plan that meets your specific coverage needs. Compare plans and rates to find the best fit for your home.
Though homeowner's insurance may not be mandatory, we believe that all individuals should purchase this protection plan when buying a house. You'll be surprised at just how much peace of mind these affordable policies can provide.