Homeowners insurance is intended to protect your home and possessions against damage. Homeowners insurance also includes liability protection against accidents that occur in the home or on the property. Basically, home insurance provides peace of mind when disasters strike.
Do I Need Homeowners Insurance?
If you are a homeowner, you need home insurance to protect assets and satisfy mortgage lenders. Mortgage lenders require homeowners to have insurance as long as their name is listed on the policy. The mortgage lenders take a loss if your home is uninsured and destroyed. Sometimes you need homeowners insurance just to rent a dwelling as an increasing number of landlords are requiring tenants to show proof of coverage.
How Much Homeowners Insurance do I Need?
You need enough insurance to cover the full replacement cost of your home. Most insurance companies limit coverage to 50 to 70 percent of the amount of insurance you have on the home. If your home is insured for $100,000, then your coverage for personal possessions may be $50,000 to $70,000. Many insurance companies reduce payout if coverage dips below 80 percent of the cost to replace the home. You should periodically review your coverage and keep an up-to-date home inventory that lists all of your personal belonging and their value.
How Much is Homeowners Insurance per Month?
Homeowners insurance costs about $66 per month, or $791 per year, based on the most recent numbers reported by the National Association of Insurance Commissioners. These figures can be higher or lower depending on your policy. Factors affecting the cost of insurance include the market value of your home, your household inventory and liability coverage, if desired.
Should I Buy Homeowners Insurance?
You should buy homeowners insurance to repair or rebuild your home if it is ever damaged by fire, lightning, wind or other disasters. You should buy homeowners insurance to cover the loss of personal belongings, such as appliances, clothing, and furniture in case of a disaster. Keep in mind most forms of homeowners insurance do not cover “acts of God,” earthquakes or floods; you need separate riders for that kind of protection.
Still, the average homeowner will run into countless scenarios when having homeowners insurance becomes a necessity:
- Hazard protection against fire, hail, wind and other perils
- Liability protection against accidental falls on the property
- Personal property protection against theft or vandalism
