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Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people.
Unlike driving a car, you can legally own a home without homeowners insurance. If you have bought your home and financed the purchase with a mortgage, your lender will most likely require you to get homeowners insurance. Another name for this is sometimes referred to Hazard Insurance. Hazard insurance is property insurance that you are required to purchase to cover any damage that may occur to the property itself or to someone while in or on the property. Frequently the lender requires the first year's insurance premium to be paid at close of escrow. This is usually required because lenders need to protect their investment in your home in case your house burns down or is badly damaged by a storm, or other disaster. If you live in a a flood zone, your bank may also require you to purchase flood insurance. Some financial institutions may also require earthquake coverage if you live in a region vulnerable to earthquakes. If you purchase a condominium, your homeowners association may require you to buy homeowners or condo contents insurance.
After your mortgage is paid off, no one will require you to buy homeowners insurance. But it doesn't make sense to cancel your policy and risk losing what you’ve invested in your home. Your home may be your single most valuable asset. Protect your home, protect your belongings, and protect the assets you’ve worked so hard for!
Dwellings and other structures - For most of us, our home is the single, largest investment we will make. Homeowners insurance may provide coverage for damage to your home and other structures on your property such as a shed or detached garage.
Personal Property - Homeowners insurance also provides coverage for your household contents and personal belongings. You may think your couch, coffee table, sweaters, shoes, coats; TV, VCR and CD player aren't worth a lot but those items all add up.
Personal Liability - In the event someone is injured on your property or you damage property that belongs to others, you could be held legally liable for the injury or damage. A homeowner policy provides liability and personal property insurance to financially protect you should this ever occur. You can choose different limits of personal liability coverage. Ask your agent for a quote on different options.
Is my jewelry covered by my homeowner’s policy?
On a homeowner’s policy, there is limited, standard coverage available for your jewelry and watches. In most cases, you will need to purchase a Personal Articles Floater, which extends protection for your jewelry or other items when its value is higher than the limits stated in your homeowner’s policy. An appraisal may be required for each item that you want to have scheduled on your jewelry floater.
Am I covered for earthquake damage?
No. Earthquake coverage is available as an additional coverage to the homeowner’s policy. Earthquake coverage has it's own separate deductible. Generally this there is either a 10% or 15% deductible for Earthquake coverage. You can custom tailor your earthquake coverage to include a certain amount of personal property coverage along with coverage for your house itself. To determine whether you should purchase this insurance, talk to your local insurance agent. In earthquake prone areas, the cost of this insurance is relatively high due to the risk. In other areas, it is relatively inexpensive.
This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.
Copyright © 2006 John Tesoriero Authorized Agent, CA License 0E27104
