What Is Home Owners Insurance?
Insurance for home owners is a product provided by most property and casualty insurers in every state. Policies offer a variety of coverages that can be customized to meet the needs of any individual who requires a policy. Obtaining a homeowners insurance policy is not a requirement like automobile insurance, but it may be required depending on certain situations. Policies are designed to provide coverage for a building, contents and liability.
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Purpose
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The purpose of homeowners insurance is to protect an individual's property and home from various types of loss. Loss can occur from damage sustained by weather, which can include wind and hail that can result from storms. Loss can also occur from an injury that is suffered by another individual or visitor on a policyholder's property. Coverages are included on a homeowners policy that provide protection from these types of losses.
Property Coverage
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Property coverage on a homeowners policy includes the building or dwelling, other structures on the property and the contents of a dwelling. Coverage for the dwelling will pay for damage that occurs to the exterior and interior of the home. Other structures include coverage for buildings on the property such as a garage or pole barn. Property coverage also includes the contents of a home or personal property such as electronics and furniture.
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Liability Coverage
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Liability coverage on a homeowners policy typically consists of personal liability and medical payments. Coverage for personal liability includes protecting a policyholder when a visitor or guest is injured on the policyholder's property. If a policyholder is sued for damages as a result of injury, a homeowners policy will pay legal costs. Payments are also made for medical expenses in case a visitor or guest has been injured on an insured person's property.
Replacement Cost
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Most homeowners insurance policies provide coverage for replacement cost. The replacement cost is the amount it will cost to totally rebuild a home in the event of a loss. The replacement value of a home is different from the appraised value because the cost of building materials is included in the value. Replacement cost can be guaranteed on a policy or provided by an endorsement depending on a home's age.
Requirements
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Homeowners insurance is not required by any state laws, unlike an insurance policy for automobile insurance. However, individuals who have a mortgage or a loan from a bank are usually required by the lender to have a homeowners insurance policy as a condition of the loan. The lender may also require that it be added to the homeowners insurance policy as a secured interest party.
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