Buying a home is one of the single largest investments that
most people ever make. If you need to protect that investment,
your main line of defense is homeowners insurance.
standard homeowners insurance policies will provide coverage
for damage to your home (and many of the items in your home)
caused by theft, fire and lightning, smoke, frozen pipes
and ice and snow. Read your homeowners insurance policy
to find out exactly what is and is not covered. Do this
before you suffer a loss, so you won't be surprised. Most
insurers exclude damages caused by an act of war, nuclear
accident, flood, earthquake, and terrorism, although you
may be able to purchase special policies or endorsements
that will cover these events.
Mortgage lenders require that borrowers purchase a minimum
amount of homeowners insurance (typically equal to the appraised
value or the purchase price of the home). But this is often
not the amount of coverage you truly need. Instead, find
out how much it would cost to rebuild your home, and consider
insuring it for that amount.