What is homeowners insurance?

Homeowners insurance helps pay for damages to the owner's home or to property in the home. The insurance also helps pay for costs associated with an accident that occurs in the home or on the owner's property.

However, most homeowners insurance policies do not cover damage resulting from natural disasters, such as floods, earthquakes, tornadoes and hurricanes, or by acts of war. Homeowners can purchase separate insurance to obtain that coverage. There are seven types of homeowners insurance policies to suit various home ownership, rental and leasing needs. Most mortgage lenders require home buyers to purchase an insurance policy as part of the mortgage agreement.