Home Insurance Articles
Laws Regarding Your Home Insurance Requirements
2010-07-16
A homeowners insurance policy is not required by law, but is regulated under the home insurance laws of your state. Home insurance laws define your rights as a consumer and determine when and how the insurer can raise your rates. If you have a mortgage, your bank or finance company will most likely insist that you carry homeowners insurance in order to protect its financial interest in your home. Additionally, a homeowners insurance policy typically makes financial sense, even if you do not have a mortgage. Most people do not have the financial resources to rebuild a damaged home on their own or pay the claims of a person injured on their property.
When purchasing a homeowners insurance policy, you are entering into an agreement with the insurer. Essentially, you agree to pay the premiums on time, and the insurer agrees to pay claims in accordance with the terms of the policy. While the basics of contract law apply to this agreement, your state's home insurance laws further define what the terms of the policy can be. A homeowners insurance policy generally covers two types of claims: claims made by you, the homeowner, for certain types of damage to your home and its contents, and claims made by others who are injured on your property. The policy will then set limits for the maximum amount that will be paid for each type of claim. If the limits are not sufficient to cover potential losses, you can usually get a new policy with higher limits, for a higher premium.
Home insurance laws will typically define the limits and exclusions that are permissible in your policy, how and when the insurance company can cancel your policy, when and by how much the insurance company can raise rates, under what circumstances the insurance company can change your rating, and the procedures for challenging a denial of a claim or policy cancellation. In cases of a third party claim, where a person is injured on your property and sues you as the homeowner, the home insurance laws will work in conjunction with your state's rules and procedures for personal injury suits. Whenever you are sued in your capacity as a homeowner, it is imperative that you notify your insurance company immediately, and it is also advisable to hire an attorney to represent your interests. Keep in mind that your homeowners insurance policy will cover the claim, but only up to the limits of your policy. Any claim in excess of your policy limits could expose you to personal liability.
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