Education for Buyers

What Kind of Homeowner’s Insurance Should I Carry?

Your lender requires you to carry a homeowner's insurance policy (hazard insurance), protecting your home and the lender's money against hazards such as fire, smoke, wind, hail, explosion, riot, theft, glass breakage, and damage caused by aircraft, vehicles, or vandalism. A basic policy also protects you against injury to a visitor on your property.

An "all-risk" policy reimburses you for the major hazards plus damage due to lesser catastrophes such as burst water pipes. But, to insure all your equity and personal property, you may still need additional coverage.

A "guaranteed replacement cost" policy covers your home and contents for the full replacement value, rather than the actual cash value.

A policy with an "inflation guard" adjusts the amount of coverage based on the inflation rate.

Next: Important Things to Remember!