You've worked hard to buy a house and the possessions inside it. Why put all that at risk? Home insurance is the most important type a homeowner can buy. In fact, without it, many lenders will not advance mortgage funds when buying a home. Either way, it's a matter of common sense - protecting your most valuable asset should be everyone's number-one priority.
Homeowners insurance has a myriad of coverage options. Usually a policy has four main components:
An important point to remember when obtaining insurance is to get a policy that pays out claims on the replacement value of the property, rather than the actual cash value. If your 35-millimeter camera is stolen and you've owned it for several years, under an actual cash value policy you'd only be paid the equivalent of a used camera whereas the replacement cost policy will provide one that is brand new.
There are two basic types of homeowner policies. The first is all-risk, which generally covers the standard 16 types of damage. The second is named-peril insurance, which covers specifically designated damage only. Common exclusions from most homeowner's policies include floods, earthquakes, landslides, and wear and tear. In most cases, the all-risk policy is the way to go. However, even with the full coverage, sometimes Mother Nature can deal a bad hand, as was the case with Hurricane Katrina. Many people didn't have flood insurance, which you must purchase separately, so even though their policies protected them from the wind damage of the hurricane, unless they had flood insurance, they were out of luck on the water damage.
Home insurance protects your most valuable asset. Take the time to get all the answers you need before making a decision. It makes good financial sense.