Household insurance

For most people who own a house, the house is their primary and most valuable asset. Protecting this asset is vital, which is the reason nearly everyone purchase household insurance. Such insurance is of course required by lenders as part o the mortgage process, since the mortgage lender also is invested in the house.

Household insurance covers you and your house in several different ways. The typical household insurance policy covers the following risks:

This coverage, previously known as "fire insurance" is to pay you for repair or rebuilding if your home is damaged or destroyed by a fallen tree, lightning, earthquake or other cause. This can be an important part of the policy to read for obvious reasons, and it is certainly important when considering where to buy a house.
Household insurance is much more expensive in flood-prone areas, areas where hurricane damage is common, etc. This is a good reason to make sure you aren't buying into a house that's in a common flood plain. It's also a reason to understand that if you choose to live in a hurricane-prone shore area, your household insurance premium will be high.

As for the contents, the coverage limits are usually related to the value of your house. Most household insurance companies provide ample coverage for your house's contents. This includes all furniture and furnishings, clothing, art, jewelry, china...anything contained in the house or other buildings on your property.
The suggested coverage value in total is based on a percentage of the coverage limit on your structures. Since it is usually at least half the value of the structures, the amount assigned to your policy for other property is more than adequate under most circumstances. However, most household insurance has limits on particular items. If you have very valuable paintings or jewelry, for example, you would need to have them itemized in your policy at their market value, and you will pay a bit higher premium on your policy.

This aspect of your house insurance actually goes beyond the house and property itself. It is actually protection against damages to other people outside your family, whether the damages occur on your premises or not. The primary purpose of this coverage is for protection against lawsuits for people being injured or killed on your property or for property damage (theirs) either taking place on your property or being caused by one of your family members.

The liability section of your household insurance also provides no-fault medical coverage. If someone is injured in your home or on your property, that person can submit medical bills directly to your insurance company to recover costs. This is convenient, as it precludes lawsuits being required in cases of minor injury. (Major injury or death would of course exceed this coverage.)

All household insurance policies have dollar limits to the liabilities. The policy holder has the choice as to how much protection to buy, and it is generally preferable to obtain more coverage than the minimum (which is usually $100,000.) There is also an available coverage beyond the physical scope of liability, covering you and your family members in cases of alleged libel and slander. The need for this coverage depends on the composition of your family.

Some of the major drivers of liability premiums are property items that tend to cause accidents. If you keep or sometimes erect a trampoline anywhere on your property, your policy needs to protect you against liability. A swimming pool is another major cost driver. The biggest driver in terms of a pool would be if you choose to have a diving board installed. A pool with a diving board will push household insurance premiums up dramatically.

This portion of your household insurance is for loss of use in case your house is destroyed or is damaged to the extent that is is unlivable. Hotel or apartment accommodations, meals in restaurants, laundromat bills and the like are covered for a specified period to give you time to get back into a permanent home. Premiums and coverage vary widely. You can minimize your coverage if many family members who would be willing to help live in town.
All homeowners (and even renters) should read through their policies and carefully consider the right package of household insurance coverages for their particular needs.