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WHAT
COVERAGE DO I GET FROM A "HOMEOWNERS" POLICY?
Homeowners
insurance includes a broad package of both
property and liability coverage, many of which
cover activities away from and not in any way
connected with your home. Homeowner's insurance
pays for the repair or rebuilding of a house
which is damaged by fire or numerous other
causes, such as wind damage, freezing and vandalism,
just to name a few.
This
type of policy also pays for replacement of
the personal items inside your home if they
are damaged by the same causes that damage
the house or if they are stolen. A Homeowner's
policy also covers your legal liability which
could arise if someone is injured on your property
and also for certain types of actions which
occur away from your property that could result
in your being legally liable for damages (Homeowner's
insurance will not cover liability that is
normally covered by other types of policies,
such as auto, professional liability or business
insurance).
Your
Homeowner's liability insurance pays the damage
for which you become liable, up to the dollar
amount of liability coverage that you purchased.
Without this type of liability insurance, all
of your personal assets could be at risk if
you are sued and found to be responsible for
causing injury to someone or damage to another
person's property.
IF
I OWN A HOUSE, AM I REQUIRED TO BUY HOMEOWNER'S
INSURANCE?
Unlike automobile insurance, there usually is no
law that requires a homeowner to have insurance.
However, if you borrow money to buy a house, the
bank or loan company will take a "mortgage" or "deed
of trust" to protect its interest until the
loan is repaid.
The
mortgage or deed of trust will require that
you have an adequate amount of insurance to
cover the repair or rebuilding of the house
in the event it is damaged. Normally you will
be required to name the mortgage company as
a "loss payee" on your policy, which
means that if the house is damaged, the insurance
payment will go to the loan company, or jointly
to both you and the loan company, to assure
that the money is used to rebuild or repair
the house or, if you choose not to rebuild,
to pay off the loan.
IF
I DO NOT OWN PROPERTY, BUT ONLY RENT A HOUSE
OR APARTMENT, DO I STILL HAVE A NEED FOR
INSURANCE?
Even if you do not own the building where you live,
it is likely you have valuable personal items which
would be expensive to replace if they are stolen
or damaged by fire or some other cause. Also, you
still have potential legal liability to someone who
is injured on property you occupy, even if you are
not the property owner.
A "Renters
Policy" is essentially like a Homeowners
Policy but without coverage for the buildings
or structures. Because of this, Renters Policies
usually cost far less than Homeowners Policies.
There usually are no legal or contractual requirements
to have a Renters Policy, although it is possible
that, by the terms of some leases, tenants
The
purpose of this newsletter is to stimulate
thought for our clients and those professionals
we network with. One should consult with a
qualified insurance planning professional prior
to implementing any insurance planning strategies.
If you are an real estate planning, estate,
mortgage or financial planning professional
receiving this newsletter, please call our
office and introduce yourself to us. We are
always seeking to grow our referral network
and expose more service professionals to our
client base.
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