Get the Right Homeowner’s Insurance to Protect Your Home
Home insurance, also called hazard insurance or homeowners insurance (abbreviated as HOI), is the type of property insurance that covers private homes. Home insurance is a must for any home owner to protect yourself from the unlikely event of losses.
If you have a mortgage, your lender will require you to have homeowner’s insurance since the bank wants to protect the collateral (property, asset), if it were to be destroyed. Your insurance cost is cheaper if you comparison shop than have your lender pick an insurer.
Even if you paid off your mortgage free and clear, it’s wise to buy homeowner’s insurance for your home from disaster.
The insurance policy itself is a lengthy contract, and names what will and what will not be paid in the case of various events. It combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, living expenses, or loss of other personal possessions, as well as liability insurance for accidents that may happen at the home.
Getting the Right Types of Homeowner’s Insurance
Type of coverage you should get depends on your level of risk and the amount of coverage you want for your personal possessions, and location of your home. Getting the right home insurance is important to protecting your wealth and providing you with peace of mind.
There is no need to buy coverage for every possible disaster. Homes in Florida would want to get hurricane coverage as opposed to homes in Los Angeles. Research the kind of natural disasters that can occur in your area. If your home is in an area that gets tornado, make sure to get coverage for tornado damages.
Always get coverage for flooding or fires, since these are common disasters that can happen anywhere.
Insurance Services Office (ISO), based in Jersey City, New Jersey，provides risk information and issued a simplified homeowners policy for resell to insurance companies. ISO has seven standardized homeowners insurance forms in general use.
HO1 Basic Homeowner Policy
A basic policy form that provides coverage on a home against 11 listed perils; contents are generally included in this type of coverage, but must be explicitly enumerated. The perils include fire or lightning, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles and aircraft, explosion riot or civil commotion, glass breakage, smoke, volcanic eruption, and personal liability. Exceptions include floods, earthquakes.
HO2 Broad Homeowner Policy
A more advanced form that provides coverage on a home against 17 listed perils (including all 11 on the HO1). The coverage is usually a “named perils” policy, which lists the events that would be covered.
HO3 All Risk Homeowner Policy
The typical, most comprehensive form used for single-family homes. The policy provides “all risk” coverage on the home with some perils excluded, such as earthquake and flood.
HO4 Renter’s Insurance
HO6 Condominium Policy
HO8 Older Houses
Insurance Policy Coverages
There are typically six coverage classifications in each insurance policy. These are based on standard Insurance Services Office or American Association of Insurance Services forms.
Property Coverages
Coverage A - Dwelling
Covers the value of the dwelling itself (not including the land). Typically, a coinsurance clause states that as long as the dwelling is insured to 80% of actual value, it will be replaced. This is in place to give a buffer against inflation. HO-4 (renter’s insurance) typically has no Coverage A, although it has additional coverages for improvements.
Coverage B - Other Structures
Covers other structure around the property which are not used for business, except as a private garage. Typically limited at 10% of the Coverage A.
Coverage C - Personal Property
Covers personal property, with limits for the theft and loss of particular classes of items, such as banknotes, bullion, coins, precious medals. Typically 50 to 70% of coverage A is required for contents, which means that consumers may pay for much more insurance than necessary.
Coverage D - Loss of Use/Additional Living Expenses
Covers expenses associated with additional living expenses and fair rental value, if part of the residence was rented, however only the rental income for the actual rent of the space not services provided such as utilities.
Additional Coverages
Covers a variety of expenses such as debris removal, reasonable repairs, damage to trees and shrubs for certain named perils (excludes wind and ice), fire department changes, removal of property, credit card / identity theft charges, loss assessment, collapse, landlord’s furnishing, and some building additions.
Exclusions
In an open perils policy, specific exclusions will be stated in this section. These generally include earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, and concurrent causation (for HO-3).
Comparison Shop Insurance Companies
The big insurance companies are Farmers, State Farm, and All State. The coverages varies depending on your state and state laws. Thus, it’s important to choose the right insurance agent to work with you. Select an agent that cares about you and your home, not one that sees you as an object to extract commission and fees.
Get the right insurance and protect your home.
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