Homeowner's Insurance

When a person purchases a home, they are required by the mortgage holder to also purchase a homeowner's insurance policy. A typical policy will cover any damage to the home resulting from hail, fire or a windstorm. In some areas, flood damage is included and, in others, it is a separate rider.

A homeowner's policy not only covers the physical structure of the house, but it protects the owner of the property should anyone be hurt in our around the home. There are three ways that you may choose to insure your home:

• Replacement cost: This will pay the cost it would be to rebuild your home, without depreciation, but has a maximum value amount.
• Extended Replacement cost: This provides money to rebuild your home plus an extra percentage to account for increased construction costs.
• Actual Cash Value: This is the cost it will be to rebuild your home at its depreciated value.

Aside from only covering the cost to rebuild your home or replace your roof, outbuildings or other structures, a homeowner's insurance policy will cover your personal belongings in the event of a fire or other major damage. Your policy will have a limit on the amount of money that will be paid out for personal property loss.

If you purchase a new home, speak with your real estate agent and your new mortgage provider regarding the required homeowners insurance policy. These people can help you determine what needs to be covered and in what amounts.