Why is homeowners insurance so important in the United States? What does it cover? Is it expensive?

If your U.S. property is purchased with a loan, the lending bank will definitely require you to purchase homeowner's insurance before closing, otherwise they will not approve your application for a loan.

If your U.S. property is purchased in full, although homeowner's insurance is not explicitly required by law, homeowners usually purchase homeowner's insurance as protection against damage caused by accidents in the home.

What does homeowner's insurance cover?

Homeowner's insurance can cover some damages caused by natural disasters, theft and man-made accidents. Most homeowners insurance policies cover the following four situations:

Damage to the structure of the house itself, such as the house itself, fences, garage, driveway, pool, etc.

Damage to personal belongings inside the home, such as household appliances, furniture, personal collectibles, etc.

Homeowner's liability insurance in case of accidents to the homeowner or visiting guests inside or outside the house.

Additional living expenses. Additional living expenses incurred by a homeowner who is unable to use the home due to a disaster, and during home repairs.

When a homeowner purchases homeowner's insurance, it is important to inform the insurance company whether the home is rented or owner-occupied.

If it is owner-occupied, the insurance company will add insurance to the private property in the house.

If it is rented, the owner does not have to insure the property in the house and can save on premiums. Often tenants will also purchase their own renters insurance to protect their property interests from loss.

Is there a difference in insurance for different types of housing?

There are three main types of real estate in the United States: condominiums, single family homes, and townhouses.

In general, the liability of the insurance is highly aligned with the ownership of the owner.

Condominiums: The owner's ownership includes only within the walls, so the portion to be covered is only within the walls, and the insurance only covers that portion.

The roof, aisles, elevators, sewer pipes in the middle of the walls, the overall structure of the house, the roads of the community, landscaping, and public facilities outside the walls are the responsibility of the condominium management board.

Single family house: The owner owns the whole house, the foundation, and the plot, so he is responsible for all of this.

Townhouse: The ownership and responsibility of the property falls between the above two and is usually closer to that of a single family home.

For example, if a natural disaster occurs and the condo needs to be rebuilt, the entire rebuild will be paid for by the management board. Condo insurance only covers damage to the owner's walls, including other personal property such as sinks and kitchens. In contrast, insurance for single family homes covers all costs.

Is homeowners insurance expensive?

The cost of insurance varies from state to state for different types of homes. Here is a general range of costs:

Single family home insurance is around $1,000 or so per year, condo insurance is around $300-$400, and townhouse insurance is between $400-$800.

How do I make a claim?

If you need to make a claim, it varies slightly by insurance company and product, but basically the process is as follows:

1. Submit a certificate. The homeowner must file a "Certificate of Loss" within 60 days of the loss and submit it to the insurance company. This form should detail the various loss items and indicate their value.

2. Commuted price. All property losses, except for those with replacement cost insurance, must be discounted. Each item has a different depreciation rate.

The annual depreciation rate is 10% for appliances, 5% for hard furniture, 10% for soft furniture, 5% for tools, 5% for clothing, 20% for curtains, 5% for cameras, and no depreciation for antiques, silverware, or jewelry.

3. Protection of rights and interests. In order to avoid the insurance company not to settle the claim according to the rules and contract terms, the insured should write down the reason of the whole incident and keep a copy of the letter communicated with the insurance company in case of emergency.