How Home Insurance Works


Homeowners insurance is a contract designed to protect you as a homeowner against sudden and accidental losses. The home insurance policy is a contract between the homeowner, also known as the insured, and the insurance company.

The contract creates an agreement that, in exchange for the premium paid by the home owner, the insurance company will compensate the homeowner for unexpected, sudden, and/or accidental damage or disasters that occur to the home, and/or the contents of the home, as agreed upon in the policy wording.

Homeowners insurance protects a homeowner's assets and ensures that a covered loss, risk or disaster will not leave them in financial distress. Whether you are looking to buy insurance as a first time homeowner, referencing information to make sure you are getting the best value for your money, or looking for help to understand your policy, here are some basics about homeowners insurance.

How Does Homeowners Insurance Work?
Your insurance policy is a contract that agrees to cover you for specified risks or perils that may happen causing you financial loss.

In exchange for a premium (the amount of money you will pay for your contract) the insurance policy forms an agreement that the insurance company will compensate you for losses as described and detailed in your home insurance policy.

All the terms and conditions of your policy dictate what is covered, how a claim will be paid, and what is excluded or limited. You can find the basic coverage information of your insurance contract on the Declaration Page of your insurance policy.

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