Many people tend to associate homeowners insurance with natural disasters. In truth, homeowners insurance has a host of applications. Nowadays, there is homeowners insurance for mobile home owners, renters, people who want only the most basic coverage and those who are living in very old homes. Most people will purchase what's known as an HO-3 policy. Such an insurance policy provides coverage for your home against theft and damage. Furthermore, an HO-3 policy will cover you, as the homeowner, against personal liability. This is especially useful in case someone gets injured on your property.
HO-3 also includes coverage against most natural disasters. However, you'll need to take out separate policies for coverage against earthquakes and floods. Basic homeowners insurance like HO-3 will generally provide coverage for any structures that are located on your property. If your home becomes uninhabitable as a result of a fire or an insured natural disaster, most basic policies will provide you with living expenses. Coverage amounts vary based on the specific type of policy you take out and the insurer you sign up with. One thing that homeowners insurance doesn't cover is the normal wear and tear that homes experience. Also, homeowners insurance will not pay for damages that are caused by poor maintenance.
Once you take out an insurance policy on your home, you'll want to verify the liability limit, which is the amount of coverage you have in case your home is damaged in some way. If you're a homeowner, you're not legally required to purchase homeowners insurance; however, the majority of lenders won't lend you money unless you have an insurance policy to cover your home. If you reside in a co-op or condominium, your tenants' association may also require you to take out a homeowner's insurance policy.