Thinking about buying your first home and wonder if you should get homeowner’s insurance? Maybe your lender has required you to get homeowner’s insurance and you are not sure what that involves?
In this post, we introduce the basics of homeowner’s insurance. Here, you can learn what homeowner’s insurance is and what it usually covers.
What is Homeowner’s Insurance?
Like all insurance, homeowner’s insurance is meant to cover you in case something bad happens. In this case, if an unfortunate incident damages or destroys your home and/or personal items in the home, your insurance will compensate you.
Some homeowner’s insurance will also cover personal injuries that take place on your property. Homeowner’s insurance isn’t required by law in Illinois, but it is common practice for lenders to require you to get homeowner’s insurance to protect their investment before they will give you a mortgage.
Homeowner’s Insurance vs. Property Insurance
Although the two terms are often used interchangeably, there is a difference between the two. The main difference comes from the term “property,” which can also include assets such as cars and boats. Property insurance covers your home and land, but homeowner’s insurance doesn’t cover damage to your boat, car, or other items often included in property insurance coverage.
What Does Homeowner’s Insurance Cover?
Not all policies are created equal, and the limits to how much they cover, called a liability limit, will vary from provider to provider. The typical homeowner’s insurance covers:
The House: Damage to the home and attached structures
Stand-Alone Structures: Sheds and fences
Theft of and/or Damage to Personal Property
Liability: Neglectful injury to others on the property
Medical Payments: Injury of persons or pets on the property regardless of fault
Depending on the policy form and insurance provider, your coverage might be more extensive. It is worthwhile to shop around and compare policies from several different insurance providers to find the best value for your buck.
Types of Homeowner’s Insurance
The most commonly purchased homeowner’s insurance is the midrange HO-3 insurance policy, also called “special form.” Most lenders will require that you have this level of coverage to hold your mortgage. HO-3 generally covers:
- Fire and lightning
- Falling objects
- Vehicle damage
- Volcanic eruptions
- Damage from ice, snow, and sleet storms
- Plumbing and appliance failures
- Home appliance accidents including hot water heaters and AC units
The most comprehensive insurance is the HO-5 policy which will cover you for everything imaginable unless excluded by name in the policy. The most basic homeowner’s insurance only covers you for fire or flood damage. Generally speaking, the more types of incidents and the higher the liability limit the higher your premiums will be.
Be Sure to Insure Your Home
Considering that your home is likely to be the biggest investment in your lifetime, it only seems reasonable that you would protect that investment. Homeowner’s insurance may not be required by law, but it surely is a wise investment.
Before tragedy hits your home or household, be sure you and your family are protected. Get a quote for Illinois homeowner’s insurance right away.