How House Insurance Works

Even though almost everybody has some form of house insurance, most people don’t know how it works. A little knowledge about house insurance and how it works can help a person obtain the right coverage on his home.

Renters Insurance and Homeowners Insurance
There are two basic kinds of house or home insurance available: renters and homeowners insurance. The difference is that renters insurance only covers the contents of a home, while homeowners insurance covers both the buildings on a property and their contents.

If you are renting a home you will only need to get renters insurance because the landlord is responsible for insuring the structure itself. If you own your home, you will need homeowners insurance.

Perils and Excluded Perils
The majority of home insurance policies will only reimburse the owner for damages caused by specific emergencies. These are usually called perils, and they will be listed on the policy. Damage caused by any peril not on the list will not be covered by the policy. Before purchasing a homeowners’ policy, always find out what perils it covers.

Special Coverage
Generally you will need to purchase additional insurance or special coverage to cover the risk of perils not listed in the policy. This includes insurance for floods and, in some parts of the country, earthquake insurance.

Learn What Possessions Are Covered
Not all of your possessions maybe covered by a standard home insurance policy. In many cases, a policy will only cover items up to a certain value or only reimburse you for a portion of the value of some items. Many basic coverage policies do not cover valuables, such as jewelry. If possessions aren’t covered by the policy, you may have to buy special coverage for them.

Check On Liability Coverage

Liability coverage protects you in case of a lawsuit filed because of something that occurred on your property. Some homeowners’ policies may not provide liability coverage for home businesses and other activities. If there is no liability coverage you could be forced to pay legal costs and settlements arising from incidents. Always make sure that all regular activities that occur on your property or in your home are covered by the policy.

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