What Does Homeowners or Renters Insurance Protect Against?
If you own your own home, you probably already have a homeowner's insurance policy. If you have a mortgage, this policy would have been required before the lender gave you the mortgage. If you rent, you may have chosen to purchase renter's insurance. But do you really know what these policies cover? If you have a problem in your home, how can you find out if it is covered or not?
In a nutshell, a homeowner's insurance policy covers your home, the items it contains, and any liability you have as a homeowner. All policies have property insurance, which is what you typically consider homeowner's insurance. This coverage will pay for damage to your home and its contents caused by natural disasters, accidental fires, vandalism, and even sometimes theft. Some types of natural disasters are usually excluded, such as flooding and earthquakes.
The liability portion of the policy is also important. This covers injuries to others that are caused by your property or your family members. For instance, if you have someone visiting your home and that individual falls down your stairs, your homeowner's insurance could cover the cost of fixing the individual's broken arm. This protects you from being sued in such a situation. The main exception to this coverage is injuries that are caused by negligence on your part as the homeowner. If your friend fell down the stairs because you did not repair a broken handrail, the liability insurance would likely not kick in.
If you rent your home, you do not need liability protection or protection for the house itself. Since the home does not belong to you, you are long liable for injuries it causes, nor are you responsible for the cost of repairs to it after a disaster. This is covered under your landlord's insurance policy. However, your landlord's insurance policy will not usually cover damage to your belongings inside the property. This is where renter's insurance comes into play.
Your renter's insurance policy will cover loss of your personal property due to natural disasters, theft, vandalism, fire, and several other events. Again, floods and earthquakes are usually excluded. As a renter, this is important insurance to have, because your personal belongings could even be damaged by negligence on the part of your landlord. If your landlord did not take steps to keep the pipes from freezing, for instance, and they burst and damage some of your belongings, your insurance policy could cover the cost of those items.