What is Homeowners Insurance and Why You Must Have It

Homeowners insurance is one of the most important insurances that you could buy. Along with health insurance, vehicle insurance and life insurance, homeowners insurance is a must have. Homeowners insurance protects your home and most of the things inside it from theft, vandalism, disasters such as fire and wind. Like most insurances, a premium must be paid in order for your insurance to be active.

Homeowners insurance is required if you are leasing your home via a mortgage. Home insurance policies are usually term contracts, meaning the policy is active for a certain period of time. A premium must be payed each term for the policy to remain in effect. Homeowners insurance rates vary by company, policy and location of your home. If your home is situated near a fire house, your rate would probably be lower than most.

It is important to know that some types of situations, such as floods and war activities (sometimes referred to as a nuclear explosion) and earthquakes are not covered in the typical homeowners insurance policy. To be protected from fire damage, a special premium charge will have to be paid along with smoke detectors and fire suppression systems installed on site.

There are currently six types of homeowners insurance currently available. They are, in order: basic policy, broad policy, all risk homeowner policy, renter's insurance, condominium policy and older houses. There are also four classifications of coverage. They are, in order: dwelling, other structures, personal property and loss of use/additional living expenses.

A basic homeowner policy protects from 11 listed perils, some of which are: fire, windstorm, vandalism, theft, damage resulting from vehicles or aircraft, and explosions. Floods and earthquakes are not included in this policy. A broad homeowner policy protects against 17 perils, also including all from the basic policy. This type of policy is more expensive than the basic one. An all risk policy is the most common one in use, it provides "all risk" coverage with some exceptions including floods and earthquakes.

Homeowners insurance is a must have when you own your own home. Think of all the possible events that could transpire that would put your home in jeopardy. The list might seem endless, and it probably is. Most homes are worth in excess of 150,000 dollars, and a fire or tornado could destroy it within minutes. Homeowners insurance provides the peace of mind that no matter what happens, you will be compensated for your loss. For many people, their ultimate dream is to one day own their own home. Having your ultimate dream destroyed would send anyone into a bout of depression.

Homeowners insurance rates are also fairly cheap compared to other insurance forms, a homeowner in a good location could expect to pay as little as $500 a year for full coverage. While on the coast rates go up considerably, to the tune of $3000 per year. Even so, there is no price that you can put on your home and all the possessions inside of it.