Why You Need Insurance

Homeowners insurance is an important purchase for many people. There are two major
reasons to buy homeowners insurance:
• To protect your assets
Homeowners insurance covers the structure of your home and your personal
property, as well as your personal legal responsibility (or liability) for injuries to
others or their property while they’re on your property.
• To satisfy your mortgage lender

Most mortgage lenders require you to have insurance as long as you have a
mortgage and to list them as the mortgagee on the policy. If you let your
insurance lapse, your mortgage lender will likely have your home insured.
Compared to a policy you would buy on your own, the premium might be much
higher and the coverage will be limited to damage to the structure of your home.
The lender can require you to pay this higher premium until you get your own
homeowners insurance again.

Coverages in a Homeowners Policy

Most homeowners insurance policies provide a package of coverages. The main types
of coverage are described below. Keep in mind that you’re covered only if the loss is
caused by a peril your policy covers. For example, if your home becomes unlivable due
to an earthquake and your homeowners policy doesn’t cover earthquakes, your policy
won’t pay for loss of use of your home. Review your policy for the limits of your coverage.
• Dwelling. Pays for damage to your house and to structures attached to your house. This includes damage to fixtures, such as plumbing, electrical wiring, heating and permanently installed air-conditioning systems.
• Other Structures. Pays for damage to fences, tool sheds, freestanding garages, guest cottages and other structures not attached to your house. 
• Personal Property. Reimburses you for the value of your possessions, including furniture, electronics, appliances and clothing, damaged or lost even when they aren’t on your property, such as those at an off-site storage locker or with your child at college.   
• Loss of Use. Pays some of your additional living expenses while your home is being repaired.
• Personal Liability. Covers your financial loss if you are sued and found legally responsible for injuries or damages to someone else.
• Medical Payments. Pays medical bills for people hurt on your property or hurt by your pets.