Considering their value, homes should be insured against possible losses. If you take out a mortgage to buy a home, in fact, most lenders will require that you purchase a homeowner's insurance. When shopping for this type of insurance, look for the appropriate coverage at the right price.
A typical homeowner's insurance policy combines property insurance, which covers damage to your home and its contents, with liability insurance, which covers physical injury to guests in your home.
Your policy may also cover the cost of a lawyer if you are sued by a guest who was injured in your home.All insurance policies impose a "deductible," which is an amount you must pay before your homeowner's policy kicks in. If you have a $1,000 deductible, you must pay the first $1,000 of any loss.
Not All Damages Are Covered
All kinds of homeowner's policies specifically exclude certain types of losses. You policy may exclude intentional injuries to guests in your home. It will almost certainly exclude damage to your automobile, because auto insurance is available to cover this type of loss.
Your standard homeowner's policy may exclude damage from floods and earthquakes, unless you purchase additional coverage to protect against those losses. Damages caused by acts of war or nuclear disaster are not covered.
Make Sure You Have Enough Coverage
Mortgage lenders require you to purchase an insurance policy that covers at least 80 percent of the market value of the home. While this might satisfy the lender, it might not be enough to make you whole in a worst case scenario where your home and its contents are completely destroyed. For full protection, you need to purchase a policy that covers the entire cost of rebuilding your home from scratch. The cost of rebuilding can easily exceed the total market value of your home.
You Might Have to Negotiate a Claim With Your Insurer
Insurance companies are businesses. They make money by taking in more premiums than they pay out in claims. Expect that most homeowner's policy claims will receive close scrutiny. Before signing any homeowner's policy, read it carefully.
If you are concerned, have your lawyer review the policy as well. File claims immediately after your loss, as most policies impose time limitations. Don't sign any papers or accept any settlement from your insurance company without your lawyer's counsel. A claim that is denied can be appealed.
A Real Estate Lawyer Can Help
The law surrounding homeowners' insurance is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a real estate or insurance claims lawyer.
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