What is homeowners insurance?
Homeowners insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it. Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets. Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners’ responsibility.
Homeowners insurance protects three things: Your home, its contents, and, indirectly, your bank accounts. Let’s start with your home. A standard homeowners policy (known as an HO-3 policy in insurance lingo) will protect you from stuff like fires, fallen trees, even the occasional rogue meteor. Notice how we didn’t mention floods, earthquakes, war or nuclear accidents—those events are specifically not covered by a standard policy. You can, however, buy add-on policies for floods and earthquakes if they’re an issue for you. War and nukes? Sorry. A standard policy will also protect your possessions from said disasters as well as theft. But a standard policy isn’t a blank check: there’s a limit to how much you can collect. If you have specific items of value, you can pay a little extra each year to insure them for their full replacement value. Now, if some guy’s on your property and slips and falls and sprains his ankle, he might sue you for his medical expenses. Homeowners insurance cove
