Home Insurance Articles

How Homeowners Insurance Is Essential For New Home Buyers

2010-08-05

Most new home buyers are careful about choosing their first homes, intent on getting the best deal and value. Surprisingly, not all of them actually consider buying homeowners insurance. For some reason, it's not a topic that many homeowners discuss, even if it's as important as buying a home that's well-built and secure.

What you need to know about homeowners insurance

A homeowners insurance is coverage you purchase specifically to protect your home and belongings. This type of protection insures your belongings against certain damages, depending on the type and amount of insurance you purchase. You typically pay an annual premium in exchange for a policy that will cover against events that may occur in the future.

There are four different components that comprise homeowners insurance. These include:

Structure Insurance

This part of the insurance policy provides partial or complete coverage for actual damage a house may sustain in case of natural disasters -- storms, hurricanes, hail, lightning or fire. The coverage is limited, however and will not offer protection against damages caused by floods or earthquakes. The policy is designed to pay for the repair of the structure and should be purchased by homeowners who live in areas that have a high risk of experiencing the abovementioned events.

Personal belongings

This component of the policy provides protection against theft or damages to property found inside the home. This can include furniture, appliances and valuable objects. In general, the cost of coverage that homeowners should purchase to cover personal belongs should be at least 50% of the cost of the structure insurance.

Liability protection

This type of insurance offers coverage in case third parties such as guests and employees suffer from injury while within your property. The minimum coverage recommended is $100,000, although homeowners could opt to go higher.

Living expenses

This component provides coverage that will pay for any expenses homeowners will incur in case they have to temporarily relocate because of repairs and construction being performed in their home. This component typically offers coverage for accommodation expenses.

Why homeowners insurance is important

Disasters and damages are probably the last thing in a new home buyers' mind when they're handed the keys to his house. However, buying insurance for the home is an important pre-emptive move to protect yourself and your family from potentially massive financial losses in case something happens to your property. Remember that buying and furnishing a home is a serious investment that requires not just money but also time and hard work. Repairs, construction and other liabilities that may occur as a result of damage, theft and accidents can seriously put a dent in your wallet without sufficient coverage.