If you don’t think homeowners insurance is necessary, think again! Unless you have the funds to replace everything that gets damaged, lost, or stolen, you should buy home insurance.
What is home insurance?
Standard home insurance policies protect you against financial losses in case the structure of your home or belongings gets damaged or destroyed. These policies also offer coverage against theft and liability. So, for instance, if you have a break-in and your possessions get stolen, your policy will cover the losses. Keep in mind that the coverage offered by home insurance policies will vary.
What does home insurance cover?
- Dwelling coverage: Dwelling coverage protects the structure of your home and built-in appliances. It also protects any connected spaces like the cellar or garage. So, in the event of any damage to the structure of your home, this component of your policy will cover the rebuilding or repair costs.
- Other structures coverage: Home insurance also covers any structure or space within your property that is not directly connected to your home, such as your guest home, shed, or garage. Any damage to these unattached structures will be covered by other structures insurance.
- Liability insurance: A third-party who injures themselves on your property could take legal action against you. Liability insurance protects you against this. This includes covering the third-party’s medical bills and loss of income, your legal costs, etc.
- Personal property coverage: Personal property coverage financially protects your belongings, if they are damaged, stolen, or destroyed. Keep in mind that personal property coverage may have certain limitations. For instance, jewelry and valuables are covered up to $1,000. For additional coverage, you’ll need to buy a rider.
- Loss of use coverage: Loss of use insurance covers your living expenses in case you need to move out of your home temporarily because your home is being rebuilt or repaired due to a covered loss.
If you haven’t bought your home on a mortgage, you are not legally required to purchase a homeowners insurance policy. That said, homeowners insurance offers substantial coverage against losses you can never really plan for. So, the few hundred dollars you spend on the coverage may be well worth it.