Home insurance.

Home insurance.

What is Home Insurance?

   Home insurance insures your dwelling, whether it be apartment, condominium, or an actual house. If you are in the process of buying a house, home insurance is probably one of the conditions of your mortgage, but if you are renting, you may not have considered the benefits of owning a home insurance policy. Many home insurance policies also cover the contents of your dwelling; if you live in a furnished apartment, consider budgeting for home insurance.
   Basically it is a contract you make with an insurance company. The payment the insured makes to the insurer is called the premium. You have to pay a premium and in return the insurance company will pay for financial losses that are related to your property or your home during the period of the contract.
   Home insurance, also known as hazard insurance or homeowners insurance, provides protection against loss or damage of your property. Protecting this investment against fire, flood, theft and other risks is essential to ensure that you have the necessary financial assistance available, so that you can carry on with life.
   Homeowners insurance covers damage caused by most disasters except floods, earthquakes, and the lack of maintenance. However, if you live in a flood plane or place where earthquakes are common, you can purchase an additional coverage option to cover the losses incurred due to earthquakes and floods. Maintenance related damage is not covered by any insurance policy.

Types of Homeowners Insurance

   Insurance companies offer clients and future clients a lot of variations of home owner’s policies to choose from. They offer flexibility in terms of what insurance type they need, how much they can afford and so on. Here are the most common insurance types offered by today’s insurers:

  • HO-1: covers objects specifically mentioned under the policy (i.e. paintings and valuables).
  • HO-2: Similar to HO-1, HO-2 is a limited policy in that it covers specific portions of a house against damage. The coverage is usually a "named perils" policy, which lists the events that would be covered. As above, these factors must be spelled out in the policy.
  • HO-3: This policy is the most commonly written policy for a homeowner. It is often called "all risk" of "open perils" policy. It covers all aspects of the home structure and its contents as well as any liability that may arise from daily use, as well as any visitors who may encounter accident or injury on the premises.
  • HO-4: covers the apartments of the renters (i.e. any damage or injury within 150 feet).
  • HO-5: This policy, similar to HO-3, covers a home (not a condo or apartment), the homeowner and its possessions as well as any liability that might arise from visitors or passers-by. This coverage is differentiated in that it covers a wider breadth and depth of incidents and losses than an HO-3.
  • HO-6: similar to HO-4 but this policy is for condominium residents.
  • HO-7: policy for mobile home owners.
  • HO-8: It is called "Older Home" Insurance. It lets house owners with higher replacement cost than the market value. It insures them at a lower market value rate.
   In addition, a Dwelling Fire policy is generally available for non-commercial owners of rented houses, covering property damage to the structure, and sometimes to the owner's personal property (such as appliances and furnishings). The owner's liability is generally extended from their own primary home insurance, and does not comprise part of the Dwelling Fire policy. It is a counterpart to the HO-4 renter's policy.
   Once you decide to buy Home owner Insurance you need to know how much insurance you will need for your home.
   Contents insurance is up to you. You will have to search for adequate protection for your valuable belongings and for supplemental coverage for protection against natural catastrophes that are not covered in your basic policy.

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