Who needs homeowners insurance?

Answer 1

Those people who own single family homes, or units such as condominiums or cooperatives, need homeowners insurance.

Most homeowners policies provide physical damage coverage for the structure of the home if damage is caused by a covered peril. Another element of the coverage is for the contents of the home, also, if damaged by a covered peril.

A very important element of homeowners coverage is the liability coverage that it also provides. That is, it serves as protection for the homeowner/insured if a third party is injured on the insured premises by reason of the fault or neglect of the insured or those for whom he/she/it is legally liable. That protection consists of providing a source of payment to the claimant (indemnity), and if liability or damages are contested, a defense (the insurer hires and pays an attorney to defend the insured).

Lastly, anyone who has a mortgage on a home needs homeowners insurance. This will generally be required by the lender in order to ensure that there is a source of funds to repair the home and thereby to preserve the value of the collateral for the mortgage.