Home insurance FAQ
Q: Am I obliged to have home insurance to live in a house?
A: No, home insurance is not mandatory and is purely optional for most homeowners in the US. However, if you live in an area with high risks of fire, flood, earthquake or other natural perils then buying a home insurance policy makes perfect sense. Moreover, if you have financed your house through a mortgage your lending institution may require you to purchase specific type of home insurance with a certain amount of coverage as a condition for the loan.
Q: How much coverage should I purchase with my home insurance policy?
A: That depends on your personal insurance needs. The rule of thumb, however, is that you should purchase an amount of coverage that at least equals to the cost of rebuilding you house if it were destroyed. In order to learn what is the rebuild cost of your house, you have to multiply your house' square footage on the local construction costs per square foot. The best way to learn the local construction costs is to address different construction companies for a price list. The amount you will get in result should be your reference point when deciding on how much coverage your policy should carry.
Q: Should I get flood coverage if I live in an area far from dams, rivers and oceans?
A: That depends. Getting flood coverage as a separate policy is definitely a wise decision for people living near large bodies of water in areas with high and medium risk of flood. However, typical flood from rivers or heavy rains as we know it is not the only hazard that is classified as flood from the insurance point of view. A leaking pipe or a malfunctioning washing machine may also cause your house to flood and the damage resulted will also be classified as flood. So take this into account when deciding whether to get flood coverage or not.
Q: If my house gets robbed, will the home insurance policy pay for the stolen jewelry?
A: Basic home insurance provides coverage against burglary for the contents of your house and this includes special valuables too. However, with most policies the amount of coverage for valuable items (furs, jewelry, pieces of art, etc.) is limited to a specific sum, usually $2,000. This means that a ring costing $5,000 will get stolen form your house, you will only be reimbursed with $2,000. In order to cover your valuable items adequately you have the right to purchase weavers that will carry additional coverage for specified items with your general policy. Ask your insurance agent about adding a weaver to your policy and make sure to choose an adequate coverage amount on all the items you want to cover.
Q: Will my family member be covered if he or she gets hurt at our property.
A: No. The third party bodily injury coverage of any home insurance policy will cover injuries that the third party sustains at your property. This includes visitors, neighbors, workers, and other people who don't live in your house. Your family members will be covered by their respective health insurance policies.