Purchasing home insurance is more than signing your name to a policy presented to you by your lender when you are approved for your mortgage. The insurance policies required by a financial institution that holds the mortgage on your home only protect them, not you - it generally insures for the amount of the mortgage, payable to the lender in case of a disaster - or even the event of your death or severe disability that would render you unable to pay for the home. You need a policy that would not only pay off the mortgage if something happened to your home, but would also cover the cost of all of your belongings and give you a cushion to start over. This checklist can serve as a reminder of things you may not have considered insuring, but which would be sorely missed if your home was destroyed.
In an ideal world, a home insurance policy would provide enough funding to completely replace your home and furnishings and belongings. Unfortunately, many people buy an insurance policy without reading the fine print, and end up in hot water when misfortune strikes. There are many insurance policies that feature strict exclusions for such natural disasters such as flooding or even fire. Other policies don’t cover structural damage such as foundation settling from the ground shifting or roof damage from high winds. Still others may pay only the fair market value of the house, or the payoff amount due, instead of enough to replace your home. It is important to make sure that if the worst happened, you would be able to move instantly into a comparable home and replace your furniture, clothing and any other items which have been lost or damaged. Any insurance policy that does not cover these basics should be dismissed.