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Protect Your Home: Homeowners' Insurance

You’ve carefully planned your finances so that you could purchase a home, and now it’s time to carefully plan how you’ll protect your investment. Homeowners’ insurance is a must, but it’s important to understand what it covers, why you need it, how to shop for it, and how to file a claim when you need to.

  1. What it covers. A homeowners’ policy protects a home’s physical structure as well as the personal items within it. A homeowners’ policy also may cover:
  • Additional living expenses that can occur when you are unable to continue a normal standard of living in your home due to a covered loss
  • Personal liability from accidents to others that may occur on your property
  • Medical expenses that others incur from injuries that may occur on your property
  1. Why you need it. In addition to protecting your home and belongings, a mortgage lender may require you to have homeowners’ insurance for as long as you are paying a mortgage.
  1. How to shop for it. Homeowners’ policies may vary from state to state. Many state insurance departments provide consumer resources and online comparison tools to help homeowners find the policy that’s right for them. Here are a couple of smart shopping tips:
  • A good place to start a search for homeowners’ insurance is with the insurance company that provides your auto coverage; you may qualify for a discount.
  • If you are interested in buying a condo, you’ll want to choose a policy that insures your individual unit and your personal possessions. Be sure to study the details of the condo association’s master policy before choosing an individual policy for your unit.
  1. How to file a claim. Prepare for possible insurance claims by creating an online inventory of personal items in your home. The Insurance Information Institute offers free, Web-based home inventory software and phone apps for keeping records of your possessions. You also can check out tips and free phone apps from the National Association of Insurance Commissioners . Then, follow these steps for filing a claim.

There are many joys in home ownership, and having the right insurance policy can help you minimize financial risks so that you can rest easier at night knowing your home and belongings are protected.

(Any reference to a specific company, commercial product, process, or service does not constitute or imply an endorsement or recommendation by CashCourse or the National Endowment for Financial Education. These courses and related resources may be used only for nonprofit, noncommercial educational purposes. CashCourse makes every effort to keep the information in these courses current, but, over time, new developments as well as legislative and regulatory changes may date this material. If you discover inaccurate information, please contact us.)

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