Homeowner’s insurance provides compensation if an insured home is damaged or destroyed in particular circumstances, depending upon what is covered by the individual policy. This may include damage caused by important risks such as fire, thunderstorms, vandalism, or other harmful events. Some homeowner’s insurance policies also include compensation for possessions inside the home, extra expenses while living elsewhere after the home is severely damaged, and/or medical expenses for people who become injured on the property where the home is located.

Homeowner’s insurance is especially important if the home is being paid for through a mortgage; according to wikipedia.org, U.S. banks usually require mortgage borrowers to have this type of coverage. This is because the bank would have no way to recover the money it loaned to the homeowner to buy the home, if it is uninsured and becomes severely damaged. Wikipedia also indicates that banks sometimes exempt homeowners from this if the land the home is located on is of greater value than the loan amount.

There are a variety of homeowner’s insurance types available, according to the Mississippi Department of Ins. issued “Homeowners Insurance Consumer’s Guide.” These types include coverage for renters, townhouses, and condominiums, among others. Policies apply to a single important risk (”named peril”) or multiple (”open perils” or “all risk”). Damage caused by flooding, and some other types of natural disasters, is usually not compensated for by homeowner’s insurance. As with medical insurance, less expensive homeowner’s policies often have higher deductibles; the policy will only compensate for costs which exceed the amount of the deductible. It is important to make sure that the policy covers risks most likely to affect the home in question.

Such risks are more widespread than some might believe. According to U.S. Fire Administration statistics, there were approximately 412,000 residential structure fires during the year 2006; these caused nearly seven billion dollars in damage. The Department of Justice website indicates that approximately 2.15 million burglaries (which does not include theft from automobiles) took place in 2005. Still, a less expensive high-deductible homeowner’s insurance policy may be preferable for a brick house with few valuable possessions in it.

In most situations, homeowner’s insurance is very important to have, both for ensuring the financial security of the home’s residents and meeting the mortgage requirements of banks. Only if the home (not including the land) and its contents are of rather limited value or especially unsusceptible to damage might it be appropriate not to hold such insurance.