Bills Logo

The Need for Home Owner Insurance

The Need for Home Owner Insurance Team
UpdatedDec 1, 2010
  • clock icon
    3 min read
Key Takeaways:
  • Learn how to protect your most important investment - your house!
  • Find out what should be covered.
  • Discover what sets the premium price.

The Need for Home Owner Insurance

So you purchased a home. Congratulations! Buying a home is a big step in anyone's life and a great investment. Now it's time to protect your investment by purchasing home owner insurance.

Home insurance is an insurance policy that covers your house, the garage, other related structures, and also personal possessions inside the home against damages caused by everything from fire to natural disasters and even theft. Different home insurance policies offer different levels of coverage. An all-risk policy, for example, covers your home and your property against any and all disasters or theft. However, just like with any insurance policy, the higher the coverage, the higher your premiums.

Home Owner Insurance and Coverage

Many lending institutions mandate mortgage clients to have a basic level of home owner insurance to receive a home loan. This requirement guarantees them that in the case of a catastrophic event, their mortgage balance will still be paid out. But you don't need to stop there. Depending on what specific items and areas of your home you want protected and in what type of event (i.e. earthquake, fire, theft) you want your home protected in, you can increase your home insurance coverage above and beyond the level required by the mortgage company. The price of your home is fundamentally where you begin when deciding on the level of coverage for your home.

So, you need to first establish the amount it would cost to repair and/or rebuild your home. Once that amount has been established, insure your home for that amount. Some home owner insurance policies also automatically adjust the level of coverage each year to take into consideration appreciation and the increased value of your home.

Home Owner Insurance and Personal Property

Remember, protecting your home is not the only reason to get home insurance. Different levels of coverage can also protect the items in your home. It you want to protect your home and everything in it, take inventory of your personal property, including furniture, high-end electronics and appliances, and anything of value. This will establish a value for all items in your home. Take this value and add it to the coverage level of your home insurance policy. If you can't afford that amount of coverage, take a percentage of the overall value of your personal property and adjust the level of coverage based on what you can afford and what you'd want replaced. If you want to protect your personal property, you need home owner insurance.

Home Owner Insurance and Pets

Believe it or not, your pets play a part in why you need home owner insurance and in deciding the level of home insurance coverage you choose. That's because your pets can cause damage to your home and injury to others. Different levels of home insurance coverage also cover injury in the home and protect you against lawsuits. If you have pets, remember that they can lead to damage and injury; so invest in home insurance and choose your level of home insurance coverage accordingly.

If you want to protect your home and your family, you need home insurance. It covers you when the unexpected occurs. Without it, you could end up losing everything.