Homeowners insurance is a form of property insurance that covers losses and damages to an individual’s house and to assets in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.

When a mortgage is requested on a home, the homeowner must provide proof of property insurance before the lending bank will issue him or her a mortgage. Property insurance can be purchased separately or through the lending institution. Homeowners who prefer to obtain their own insurance policy can compare various options and select the plan that best meets their needs. If the homeowner does not have property insurance, the bank may obtain one for them at an additional cost.

Payments for a homeowners insurance policy are typically rolled into the homeowner’s mortgage payments. The portion for insurance coverage is allocated to an escrow account by the lending bank that receives the payment.

A homeowners insurance policy will typically cover four incidents on the insured property: interior damage, exterior damage, loss or damage to personal assets/belongings, and injury while on the property. When a claim is made on any of these incidents, the homeowner will be required to pay a deductible, which is effectively the insured’s out-of-pocket costs. For example, a claim is submitted to an insurer for interior water damage in a home.

Every homeowners insurance policy has a liability limit that determines how much coverage the insured has in the event of an unfortunate incident. The standard limit is usually $100,000, but the policyholder can choose a higher limit. In the event that a claim is successful,

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