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Homeowner's insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it. It covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.

A standard homeowners policy includes four types of coverage:

1. COVERAGE FOR THE STRUCTURE OF YOUR HOME

This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by disasters listed in your policy. Most likely, it will not pay for damage caused by a flood, earthquake, or routine wear and tear.

Most standard policies also cover structures that are detached from your home such as a garage, tool shed or gazebo. Generally, these structures are covered for about 10% of the amount of insurance you have on the structure of your home.

Some banks require you to buy homeowners insurance to cover the amount of your mortgage. If the limit of your insurance policy is based on your mortgage, make sure it’s enough to cover the cost of rebuilding. If your mortgage is paid off, don’t cancel your homeowners policy. Homeowners insurance protects your investment in your home.

2. COVERAGE FOR YOUR PERSONAL BELONGINGS

Your furniture, clothes, sports equipment and other personal items are covered if they are stolen or destroyed by fire or other insured disaster. This part of your policy includes off-premises coverage, which means that your belongings are covered anywhere in the world. Expensive items like jewelry, furs and silverware are covered, but there are usually dollar limits if they are stolen. To insure these items to their full value, purchase a special personal property endorsement or floater and insure the item for its appraised value. Coverage includes “accidental disappearance,” meaning coverage if you simply lose that item, and there is no deductible.

3. LIABILITY PROTECTION

Liability covers you against lawsuits for bodily injury or property damage that you, your family members, or your pets cause to other people. If you or a family member accidentally ruins your neighbor’s expensive rug, you are covered. However, if they destroy your rug, you are not covered.

The liability portion of your policy pays for both the cost of defending you in court and any damages a court rules you must pay, up to the limit of your policy. You are covered not just in your home, but anywhere in the world.

Liability limits generally start at about $100,000. However, experts recommend that you purchase more coverage. You can purchase an umbrella or excess liability policy which provides broader coverage, including claims against you for libel and slander, as well as higher liability limits.

Your policy also provides no-fault medical coverage. In the event a friend or neighbor is injured in your home, he or she can simply submit medical bills to your insurance company. This way, expenses are paid without a liability claim being filed against you. It does not, however, pay the medical bills for your family or your pet.

4. ADDITIONAL LIVING EXPENSES

In the event you are temporarily unable to live in your home because of a fire or other insured disaster.

This pays the additional costs of temporarily living away from home if you can't live there due to damage from a fire, storm or other insured peril. It covers hotel bills, restaurant meals and other living expenses incurred while your home is being rebuilt. If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

Homeowner's insurance F.A.Q. Q: Can I own a home without homeowners insurance? A: Yes, however, if you have bought your home and financed the purchase with a mortgage, your lender will most likely require you to have homeowners insurance coverage. Lenders need to protect their investment in your home in case your house burns down or is badly damaged by a storm, tornado or other disaster. If you live in an area that is likely to flood, the bank will also require you to purchase flood insurance. Some financial institutions may also require earthquake coverage if you live in a region vulnerable to earthquakes. If you buy a co-op or condominium, your board will probably require you to buy homeowners insurance. After your mortgage is paid off, no one will force you to buy homeowners insurance. It is not advisable, however, to cancel your policy and risk losing what you’ve invested in your home. Q: Am I covered for flood damage? A: No. So, if you live in a flood-prone area it may be wise to purchase flood insurance. Flood insurance is provided by the federal government, under a program run by the Federal Insurance Administration. In some parts of the country, homes can be damaged or destroyed by mudslides. This risk is also covered under flood policies. Q: If water seeps into my basement from the ground, am I covered? A: No. Water seepage is excluded under most homeowners’ policies. Also, if the water seepage is not due to a flood you will not be covered under a flood policy. Seepage is viewed as a maintenance issue and is not covered by insurance. You should see a contractor about waterproofing your basement. Q: Am I covered for earthquake damage? A: No. Earthquake coverage is sold as additional coverage to the homeowners policy. Q: A neighbor slips on my sidewalk or falls down my porch steps and threatens to take me to court for damages. Does my policy protect me? A: Yes. The policy will pay for damages, if a fall or other accident on your property is the result of your negligence. It will also pay for the legal costs of defending you against a claim. Also, the medical payments part of your homeowners policy will cover medical expenses, if a neighbor or guest is injured on your property. You should check to see how much liability protection you have. The standard amount is $100,000. If you feel you need more, consider purchasing higher limits. Q: I have children away at college. Are they covered by my homeowners insurance? A: If they’re full-time college students and part of your household, your insurance generally provides some coverage in a dorm, typically 10 percent of the contents limit. If they live off campus, some companies may not provide this limited coverage if the apartment is rented in the student’s name.

If you have purchased a condo or co-op, the bank will require insurance to protect its investment in your home. You may, however, need more insurance to cover your personal items, liability or fees that may be charged to you regarding shared areas of the building like the lobby.

You will need two separate policies to protect your investment:

1. Your own insurance policy.
This provides coverage for your personal possessions, structural improvements to your apartment and additional living expenses if you are the victim of fire, theft or other disaster listed in your policy. You also get liability protection.

2. A "master policy" provided by the condo/co-op board.
This covers the common areas you share with others in your building like the roof, basement, elevator, boiler and walkways for both liability and physical damage.
To adequately insure your apartment, it is important to know which structural parts of your home are covered by the condo/co-op association and which are not. You can do this by reading your association’s bylaws and/or proprietary lease. If you have questions, talk to your condo association, insurance professional or family attorney.

Sometimes the association is responsible for insuring the individual condo or co-op units, as they were originally built, including standard fixtures. The individual owner, in this case, is only responsible for alterations to the original structure of the apartment, like remodeling the kitchen or bathtub. Sometimes this includes not only improvements you make, but those made by previous owners.

In other situations, the condo/co-op association is responsible only for insuring the bare walls, floor and ceiling. The owner must insure kitchen cabinets, built-in appliances, plumbing, wiring, bathroom fixtures etc.

Also ask your insurance professional about the following additional coverages:

1. Unit assessment
This reimburses you for your share of an assessment charged to all unit owners as a result of a covered loss. For instance, if there is a fire in the lobby, all the unit owners are charged the cost of repairing the loss.

2. Water back-up
This insures your property for damage by the back-up of sewers or drains. Water back-up may not always be included in a policy. Check to see that it is included.

3. Umbrella liability
This is an inexpensive way to get more liability protection and broader coverage than is included in a standard condo/co-op policy.

4. Flood or earthquake
If you live in an area prone to these disasters, you will need to purchase separate flood and earthquake policies. Both flood and earthquake insurance can be purchased through your insurance agent.

Floater or endorsement
If you own expensive jewelry, furs or collectibles, you might consider getting additional coverage since there is generally a $1,000 to $2,000 limit for theft of jewelry on a standard policy.