Home Insurance: What You Need to Know

Don't understand the point of hazard or liability insurance? Now you will.

Money Sense

If you're taking out a mortgage on a home, your lender will require that you have comprehensive insurance coverage. According to the experts at NOLO, U.S. homeowners spend between about $450 and $1,300 per year for homeowner's insurance. That includes hazard and liability insurance, explained below.

Hazard Insurance: The Deal

Life happens (at least that's the polite way of saying it). Hazard insurance financially protects you and your lender from property damage due to fire, wind, lightning, riots, vandalism, theft, and other happy events. So if the boogeyman comes into your house and steals your 90-inch flat-screen T.V., or a volcano erupts and melts your roof, you'll be protected.

No Volcanoes in Ohio

We also might add that earthquakes aren't common in Ohio, either (although a tornado can run through now and again). Either way, if you're shopping for new homes in Ohio take a gander at our communities in the Cincinnati, Columbus, and Canton areas.

More Things to Cover

It isn't uncommon for the insurance company to have you pay more for other items such as pools, fences, landscaping, and personal items such as artwork, jewelry, and computers. And there are other things: Say a giant tree falls on your house and you have to check into a hotel for two months while you renovate? That's called “loss of use.” Check with your insurance company to see if this stuff is included in your policy, or if you'll have to take out additional coverage.

The Exclusions: Things the Insurance Peeps Won't Cover

Understand your policy's “exclusions”—things your insurance company won't protect. Depending where you live, events like flooding, earthquakes, and power outages often aren't covered. If you live in California (where the ground can unexpectedly move) or in New Orleans (where big ol' storms are a problem), you'll have to buy additional coverage.

Liability Insurance: The Deal

Say your Aunt Betty falls down the stairs of your property and breaks her hip. Or the UPS guy gets bitten by your poodle and needs stitches? Your liability insurance will cover “medical payment to others” so you don't have to worry.

Personal Liability

OK, so say Aunt Betty or the UPS guy decides to sue you in court. Liability insurance can also cover “personal liability.” This will cover any legal fees and any damages the court orders that you pay. Liability insurance can also cover you for actions outside your house. For example, what if you back your SUV over someone's fancy front-yard sculpture? Your debt to the owner will be covered by insurance.

One thing: Make sure your policy gives you a minimum of $100,000 in liability coverage—or better yet, between $500,000 and $1 million. Your premium won't go up all that much, and you'll have increased peace of mind. Talk to your agent.

Ryan Homes Tip: Shop around for a homeowner's insurance policy. Prices differ from company to company.