What Is Homeowners Insurance?

What Is Homeowners Insurance?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

Homeowners insurance is a type of property insurance that covers losses and damages to an individual’s house and assets in the home. This policy usually covers interior damage, exterior damage, loss or damage of personal assets, and injury that arises while on the property. The homeowner pays a monthly amount known as the premium, and in return, the insurance company will cover any costs associated with the situations mentioned above.

Related Questions

1. What is covered under the basic homeowners insurance policy?

A basic homeowners insurance policy typically covers damage to the property and the homeowner’s personal belongings due to perils like fire, hurricanes, and theft. It also provides liability coverage in case someone gets injured on your property and decides to sue.

2. What is not covered by homeowners insurance?

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Most homeowners insurance policies do not cover damage results from poor maintenance, flooding, or earthquakes. For these types of coverage, homeowners need to purchase separate policies or add-ons.

3. What factors affect the cost of homeowners insurance?

The cost of homeowners insurance is determined by several factors including the location of the home, the condition of the home, the coverage amount of the policy, and the home’s value.

4. How does a home insurance claim work?

If damage occurs to your home or belongings, you file a claim with your insurance company. They then review your claim and assess the damage. If the claim is approved, you’ll be provided with compensation for repairs or replacements.

5. Can a homeowners insurance policy be canceled?

Yes, a homeowner’s insurance policy can be canceled. You can shop around and switch insurance providers or cancel your policy at any time. However, it’s vital to ensure you have a new policy in place before you cancel the old one to prevent a lapse in coverage.