Understanding the Homeowners Insurance Policy
There are three main categories of Homeowners coverage:
- Dwelling Protection Coverage – this insures your house and other structures.
- Personal Property Coverage – this insures your personal property, such as clothing, sports and camping equipment, art, furniture, jewelry, appliances and other such items.
- Liability Coverage- this insures your assets if a claim is ever filed against you because of damage or loss suffered by another.
Merely having a homeowners/renters insurance policy does NOT mean you are protected. It depends on the policy.
Does the policy cover all of the situations of concern, such as:
- damage caused by a short circuit inside a wall,
- a water leak in a concealed area,
- cracking in your foundation,
- mistakes made by workers you hire,
- damage caused by falling trees,
- damage from dry rot?
No insurance policy covers ALL loss caused by ANY event. Therefore, before you meet with an agent to purchase Homeowners/Renters insurance, you must be prepared. Many people do not do this, but it is very important.
You need to assess:
- the types of coverage that may be included in a homeowners policy,
- the events or disasters for which you may be at risk, and
- questions to ask the insurance company, agent or broker about your potential policy.