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Why You Need Homeowners Insurance

Home Insurance Cover

Local Movers of New York

Posted On : Oct 31, 2014

Despite the burst of the real estate bubble a few years back, Americans are still in love with the idea of home ownership. The real estate market has recovered in most parts of the country, and is outright thriving in many areas. Over the lifespan of a typical mortgage, buying a home is a wise investment in most cases. So while it may be nerve racking to some degree to find a new home—first the shopping, then the offer, then all of the paperwork—it’s an investment that eventually pays off both financially and emotionally.

                But now that you have purchased your new home, you have a few things to consider, the most important of which is purchasing a homeowners insurance policy. In general, homeowners insurance covers damage to the home from unexpected events like fires or storm damage. The idea is for the insurance to cover expenses to repair the home. So, if a tree falls and damages the roof, your homeowners insurance policy will pay for removal of the tree and repair for your roof—after you pay the deductible, of course.

                So do you really need homeowners insurance? The short answer is: yes, yes you do. If you have a mortgage, you’ll very likely be required by the bank issuing the loan to provide proof of coverage. Until you pay off your mortgage, the bank really owns the home. If the home were to be destroyed by a fire, the bank would still want its money for the loan they gave you. Therefore, they require homebuyers to purchase homeowners insurance to recoup their losses in the event of a disaster.

But even if you aren’t required to purchase a homeowners insurance policy, it’s hard to imagine why you wouldn’t want to get one. Even if you purchased your home with cash and have no mortgage whatsoever, you still need to be protected against damage to your home. Even if you have enough money to pay for the repairs out of pocket, it just doesn’t make financial sense to not protect yourself.

So what does a homeowners insurance policy cover? The typical barebones policy will cover damage from fire and storms as well as water damage due to a plumbing leak. So if a pipe bursts in your home and damages the walls and carpet, your policy would pay for the repair and water damage remediation. However, if that pipe burst because you left your home for a week in the winter with the heat turned off, don’t expect the damage to be covered. Many homeowners policies also cover damage to items in the home, such as TVs, appliances, and furniture. It will cover damage to your neighbor’s property that you’re responsible for, too, such as your tree falling and hitting their home.

Homeowners policies typically do not cover damage from earthquakes or flooding. If you live in an area prone to earthquakes, you’ll need to purchase additional specialty coverage. Flood insurance is only necessary if you live in a low-lying area near a stream or in an established FEMA floodplain.

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