The Importance of Home Property Insurance and Home Liability Insurance

Major natural disasters have caused catastrophic amounts of property loss in the United States and other parts of the world. In 2005, the damage caused by Hurricane Katrina resulted in $81.2 billion in damage cost, making it the most costliest natural disasters in the United Sates history. This event, causing most insurance companies to raise home property insurance premiums to cover their risk in surrounding area.

Insurance claims are requests for payment to cover financial losses. Without the money they received from their insurance, the people affected by the hurricane may not have been able to make repairs to their homes. That’s the importance of having home property insurance of home liability insurance, it will cover your losses and damages in such event.

It is common that most people spend a great deal of money on their houses, vehicles, clothing, furniture, jewelry, and other personal property. Therefore, protecting these items from loss is highly important. Homeowners and renters in the United States lose billions of dollars from more than 3 million burglaries, 500,000 fires, and 200,000 cases of damage from other perils each year. The cost of injuries and property damage caused by vehicles is also enormous. By including home property insurance and home liability insurance in your financial plan, you can help protect yourself from such financial loss.

Imagine for the moment, the price you pay for insurance as an investment in the protection of your most valuable possessions. Your money is not go away as it seemed. Although the cost of such insurance may seem high, the financial losses against which it protects could be much higher.

There are two main types of risks related to your home and your car or other vehicle. One is the risk of damage to or loss of your property. The second type of risk involves your responsibility for injuries to other people or damage to their property.

Property Damage or Loss — The Need for Home Property Insurance

Property owners face two basic types of risks. The first is physical damage caused by perils such as fire, wind, and flooding. These perils can damage or destroy your property. For example, a windstorm might cause a large tree branch to smash the windshield of your car. As a result, you would have to find another way to get around while it was being repaired.

The second type of risk that property owners face is loss or damage caused by criminal behavior, such as robbery, bur- glary, vandalism, and arson. Insurance can help you protect yourself from loss of or damage to your property.

Legal Responsibility in Your Home — The Need for Home Liability Insurance

Liability is legal responsibility for the financial cost of another person’s losses or injuries. You can be judged legally responsible even if the injury or damage was not your fault.

Home liability insurance can be part of home property insurance or solely purchase without the latter. This is designed to cover for such unintentional accident or injuries on your home or property premises. In such events, the policy will cover you for your negligence or those you inflict on purpose are not covered in property home insurance.

For example, suppose that Michelle falls and gets hurt while playing in her friend Naomi’s yard. Michelle’s family may be able to sue Naomi’s parents even though Naomi’s parents did nothing wrong. Similarly, suppose that Johnny accidentally damages a valuable painting while helping Eddy move some of his furniture. Eddy may take legal action against Johnny to pay for the cost of the painting.

In such event where you are found legally responsible (hence liable) in a situation, it is because negligence on your part caused the mishap. Another different examples of such negligence include letting young children swim in a pool without supervision or cluttering a staircase with things that could cause someone to slip and fall, and become injured.©