Your home is a huge investment. It is one of the most valuable assets that you own. As a homeowner, it is your responsibility to protect your investment. Doesn’t matter if you are buying a new home or paid the loan for home maintenance, you might wonder about getting homeowners insurance.
There are a number of reasons that prove the importance of having home insurance for your property. Before we introduce you to its importance, know what exactly property insurance is.

What is property insurance?
Property insurance refers to a series of policies that offer either property protection or liability coverage. Property insurance can include homeowners insurance, renters insurance, flood insurance, and earthquake insurance, among other policies.
Property insurance offers a financial refund to the owner of the house in the event of theft or any kind of damage. The owner has to pay a premium to the insurance company, and in return, the insurer pays for any loss or damage to the property in the future. As a result, your property and your personal wealth are protected against uncertain expenses and damages.
For example, if any tree or change in the climate damages your property you might have to pay the entire cost for the damage out of your pocket. However, if you have property insurance, the company will bear the entire cost to fix your house. You should read more about homeowners insurance here in this article. And by the end of this article, you should have a better understanding of the clauses and their importance for your property.
Who Needs Property Insurance?
Anyone who owns property needs homeowner’s insurance. In some cases, it is even mandatory for homeowners to have insurance, either by law or mortgage contract.
For instance – all 50 states in the US need drivers to get liability insurance. This covers all the repairs to the third party or the victim of their faults. Similarly, some states have mandates for getting minimum liability homeowners insurance. The cover limit and the liability expenses, however, vary from state to state.
Before you purchase property insurance, you might have a lot of questions in your head. For example, what is covered under it? If art and jewelry are covered? What are the pitfalls to avoid?
Many homeowners have an idea about the basics of insurance policies, however, they can vary from plan to plan, and insurer to insurer. This is why it is necessary that you not only read the print but also know about the coverages and if it is overlapping with any other insurance you hold.
Misconceptions that homeowners have-
A number of homeowners do not know what actually is covered under the property insurance. A survey conducted by the Journal of Financial Planning confirmed the same and stated that homeowners have misconceptions about their property insurance. According to a survey conducted by the National Association of Insurance Commissioners, not all losses are covered under homeowners insurance.
- Approximately 30% of homeowners had a misguided view, according to which flood damage would be covered under homeowners insurance.
- Around 50% believed that any damage from a main water line break also comes under the property insurance.
- And according to 35% of Americans, mold damage was covered under insurance.
However, in reality, all these things are not covered. The perils that are not covered include:
- Mold damage
- Flood Damage
- Sewer Backup
- Pest Infestation
- Maintenance Damage such as electrical wiring, air conditioners, roofing, heating appliances
- Separate structure in your property where you run a business.
What is covered under homeowners insurance?
There is a wide range of damages that are covered such as the structures of your home including the garage, shed, fence, driveway, etc. Personal property and high-value articles such as jewelry artwork have some limitations, though. Usually, extra coverage is purchased for such assets which are known as contents insurance. Thus, before you buy any policy, always remember that you ask the agent about the additional coverages.

Fire Coverage:
House catching fires is one of the most common disasters. And, every property insurance policy protects your home structures and belongings against fire damage. For example, in a situation where your home is completely damaged, there are some standard policies that not only pay all the expenses but also cover additional living costs including the restaurant bills, hotel stays, and food.
Natural Disaster Coverage:
A wide range of natural disasters including the destruction caused by climate change comes under homeowners insurance. But not all of them. The natural disaster inclusions covered under this includes lighting, hurricanes, thunderstorms, and hails. The destruction caused by the falling trees, winds, smoke also comes under natural disaster coverage.
As mentioned above, flood damage, earthquake, or any natural movement are not covered under these policies, you live in a high-risk area. Therefore, we suggest you inquire about the policies in your contract if you live in a high-risk area. You may get catastrophe insurance or flood insurance for natural disasters like windstorms.
Personal Injury
A number of insurance policies provide coverage for the injuries that occur at your property. For example, if somebody slips or falls at a broken step of your home, the umbrella insurance provides liability coverage for the injured. Similarly, if someone is injured due to falling shingles from your roof, the personal injury liability policy should cover their medical bills and other damages.
What are Coinsurance Clauses?
A coinsurance ensures the policyholders insure their home or property to an appropriate value. The coinsurance helps in preventing inequity and allows the property owner to buy reasonable insurance in return for the value of their property.

Dangers That You Need to Avoid
Reading the policy is not enough. There are some pitfalls that you need to avoid. For example, it is important to see if your policy is covering all repairs at actual cash value or at the replacement cost. This proves to be helpful in various situations.
For instance, the fence of your home is destroyed and needs to be replaced, but the replacement cost will only cover the expense of repairing and/or replacing the fence. Whereas, the actual cash value will pay you the complete amount that your fence was estimated to at the time of damage.
Now you have an idea about property insurance and what things you need to consider before purchasing an insurance policy. We don’t want you stuck in an emergency situation. Therefore, it is better to extract some time and understand all the coverage under your policy.