WHAT IS HOMEOWNERS INSURANCE?

WHAT IS HOMEOWNERS INSURANCE? Homeowners insurance is a type of property insurance that covers private residences. It offers financial protection in case of an accident, theft or disaster involving your home.

A standard homeowners insurance policy typically covers structural damage, personal belongings, liability and additional living expenses.

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Structural damage This is one of the key differences with homeowners vs renters insurance. In the case that your home suffers damage from theft, vandalism, or is destroyed by disasters such as fire, windstorms, hail, lightning or explosions, homeowners insurance can cover the costs of repairing or rebuilding it.

Your mortgage lender might refer to this as hazard insurance, but don’t let that trip you up. It’s just part of your homeowners policy.

Most policies also cover detached structures that are separate from your house, such as a garage or tool shed. These structures are generally covered up to a percentage of the insured value of your home’s physical structure, for example ten percent.

2. Liability protection Liability protection covers lawsuits against bodily injury or property damage that you, family members, or pets may cause to others. Such protection covers court costs and any awards you may have to pay in court.

Your policy also includes what’s called no-fault medical insurance. So if a visitor happens to be injured in your home, their medical bills can be paid by your insurance company.

Additional living expenses Let’s say your home burns down and it’s now uninhabitable. While your home is being rebuilt, you’ll need to live elsewhere for a short while.

Additional living expenses (ALE) covers any living away from home costs and eases the stress of being temporarily uprooted. These expenses may include lodging, meals at restaurants, storage fees, and other costs incurred while your home is being rebuilt.

And if you rent out part of your home, the amount you would’ve collected on rent while your home is being repaired would also be covered.