Homeowner's Insurance: What You Need to Know
Editor's note: As a special feature for April, TheStreet.com offers a 20-part series on virtually everything about real estate. This installment is Part 12.
Once you find your dream home and figure out how you're going to pay for it, the next step is to get homeowner's insurance. This is an insurance policy covering the structure of your house and other structures on the property, such as a shed or fence, as well as the contents of your home, such as your furniture and other personal belongings.
Homeowner's insurance may also cover you against lawsuits in the event that you or a family member cause bodily injury to someone else or damage someone else's property.
It's important to note that ordinary homeowner's insurance, also known as hazard insurance, does not cover damage caused by floods or earthquakes. This can't be emphasized enough. Even though the insurance declarations for hazard policies specifically state that any damage caused by flooding is not covered, many people who suffered damage in Hurricane Katrina expected to have their flood damage covered, only to have their claims denied.Flood insurance is sold exclusively through the National Flood Insurance Program, found at FloodSmart.gov. Most private insurance companies will sell you a separate earthquake policy, except in California, where the California Earthquake Authority provides this coverage. For most people, homeowner's insurance is not optional. If you take out a mortgage, it is very likely that the lender will require proof of insurance at closing. In fact, lenders prefer you to escrow your homeowner's insurance premium and property taxes as part of your monthly mortgage payment. This way the lender or loan servicer will pay your annual insurance premiums and property taxes and adjust your loan payment accordingly.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV