Home Insurance: Home owners guide to insurance

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You surely must be proud of your home and would like to keep it protected from damages. This is why you need home owners insurance policy. Such a policy not only protects your dwelling but also covers your personal possessions and personal liability.


What is a homeowners policy?

It is a package policy that covers damage to your property and liability that would arise or a legal responsibility for any injury caused to your neighbors or visitors by you or your family members. Homeowner insurance covers several kinds of damage but there are certain exceptions too. Floods, earthquakes and poor maintenance are not covered under a standard home insurance policy.
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What does home insurance usually cover?

A standard home insurance usually covers:
  1. The structure of your home: If fire, hurricane, hail, lightning or any other listed disaster destroys your home and you need to repair or rebuild it, this policy pays for it. Flood, earthquake or routine wear and tear is not covered under this policy. You should buy enough coverage that would pay for rebuilding your home if needed.

    Structures like garage, gazebo or a tool shed that are detached from the policyholder's home are also usually covered. However, these structures are covered for 10% of the total value of the insurance that you purchase for your home. Ask your agent for a suitable home insurance quote if you need additional insurance coverage.

  2. Personal belongings: You will find coverage for your furniture, sports equipment, clothes as well as other personal items if stolen, destroyed by a hurricane, fire or any other listed disaster. Since most companies provide 50% to 70% coverage of the total value, the best way to determine the right amount of insurance to buy would be to create a home inventory.

    You may be anywhere in the world, but this policy will provide coverage for any damage caused anywhere. This means that you get protection off-premises, but some companies have limitations. They may provide only up to 10% coverage of the total insurance value for your possessions.

    You may also find coverage for your expensive jewelry, silverware and furs. But in the event that they get stolen, the insurance companies put a dollar limit to your jewelry and fur. If you want full value for such items, then you need to purchase special personal property endorsement or an additional floater policy. Such coverage would include accidental disappearance and comes without any deductible.

    For trees, plants and shrubs, you generally get 5% of the total value of insurance on the house. These will be protected from explosion, vandalism, theft or a falling aircraft but damage by wind or disease is not covered.

  3. Liability: If you or any of your family members including your pet causes any damage to your neighbor or other people, this policy provides coverage. The cost of defending you in court is also covered under this policy up to the limit provided here. The coverage is available not just in your home but also anywhere else in the world.

    Purchasing a cheap liability insurance limit makes no sense. You should purchase enough to cover yourself properly. Moreover, there are umbrella policies for broader coverage like if you have claims made against you for libel or slander. In addition to this the no-fault medical coverage that the policy provides covers you for any injury a neighbor or any outsider may acquire in your house. A liability claim need not be filed against you, but the bill may directly go to the insurance provider instead.

  4. Additional Living Expenditure: If fire, storm or any other listed disaster caused damage to your home and you are not able to live there, this policy pays for the additional costs of staying away from home for a temporary period. Expenses like hotel bills, bills for restaurant meals and other related living costs while your home is being rebuilt will be borne.

    Usually the companies offering homeowner insurance provides 20% coverage of the total value of the insurance on your house under this policy. Some companies may allow you to increase this coverage for an added premium. You may also avail a policy that offers unlimited coverage for loss from certain companies. But this coverage is only for a certain time limit.

    Those of you who have partially let your house may also find coverage that compensates the rent that you would otherwise get from your tenants.

    There are of course certain perils that home insurance does not cover like flood and earthquake. For these you need to get separate policies.
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What are the types of homeowner insurance?

There are 4 types of policies in general and depending on whether you own a home or a co-op or a condo, or rent a home.
  • When you own a home, you may choose from:
    HO-2 or Basic Policy: The homeowner insurance covers you against disaster resulting from vehicle caused damage, smoke, vandalism, theft, falling objects, ice, snow or sleet, lightning and fire, windstorm, hail, explosion, any civil commotion or riot, accidental tearing apart, cracking, bulging or burning of steam/hot water system, air conditioner or a fire protective system.

    HO-2 also covers overflow of water/steam from plumbing, air conditioning, heating, fire protective sprinkler system or a household appliance. Freezing of a plumbing, heating, fire protective system, any electronic household appliance is also covered. Besides these damage caused as a result of an accident from electrical current is also a part of such coverage.

    HO-3: This is a special policy under the homeowners insurance that provides protection against all dangers as listed in the policy.

    HO-8 or older home: This policy designed for older homes calculates the depreciation value of the home before settling the claim. The present worth of the home is reimbursed after deducting the depreciation value.

    HO-1 or Limited Coverage Policy: Covers you against disasters from smoke, vandalism, theft and volcanic eruption, lightning and fire, windstorm, hail, explosion, any civil commotion or riot, vehicle caused damage. However, this insurance is almost extinct in most states now.

  • When you own a co-operative or a condominium you may have:
    HO-6 or condo/co-op policy: This policy provides coverage for your belongings in the structural part of the building when you reside in a condominium association. It protects you against all listed disasters. There are 3 levels of coverage that this policy offers:
    1. Actual cash value: This level pays to replace any damage caused to your possession after deducting the depreciation value.
    2. Replacement Cost: This level reimburses the cost incurred for rebuilding or repairing your portion of the condominium association.
    3. Guaranteed or extended replacement cost: This level pays for re-establishing your condominium even if it means exceeding the policy limit. This means you can get protection against sudden increase in the cost of construction arising out of a shortage of building materials.

  • When you rent a house:
    HO-4 or renter policy: Renter policy protects your belongings and also all parts of the apartment that is owned by you when you rent your home.
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How an insurer sets your home insurance rates?

You should determine how much coverage will be enough for your home, keeping your financial condition in mind. After you select the insurance company that you find the most appropriate, you'll need to apply for your policy. The company will then try to evaluate your risks through the underwriting process, before allowing you coverage.

The underwriting process for a home insurance determines whether you'll be covered or your insurance application for insurance will be rejected. Your coverage limits and rates are also determined in the same way.

The factors which are considered by the underwriters include:

  1. Type of construction for the building (brick, frame, EIFS etc.)
  2. Size of the house.
  3. Age and condition of the building.
  4. Date and details of the renovations done to the original construction (if any).
  5. Location of the property.
  6. Proximity to the nearest fire station.
  7. Safety devices installed in the house (alarm systems, smoke detectors, sprinklers, security set-ups etc.)
  8. Probabilities of natural perils in the zone (Flood, hurricane, windstorms, earthquake etc.)
  9. Purpose for which the house is used (full-time residence, or seasonal, during vacations etc.) Also, whether the property/house is occupied or left vacant most of the time.
  10. The applicant's preference of deductible, coverage limits and benefits.
  11. Credit history of the homeowner.
  12. Insurance score.

To know more about these factors, click here.

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Can you save money with home insurance?

With a little shopping around you can surely save some money with home insurance. The size of your house and the insurance provider are an important factor in determining the cost of your home insurance policy. Here are few ways by which you may save money:
  1. Shop around for insurance:
    When you are looking for a home insurance it is better that you shop around a little to get the best home insurance quotes. Prices vary from one company to another. Hence you must always check the financial health of the insurance provider. You must know that going for a cheap home insurance doest not always help. You must get a policy that covers your home and its contents to its true value.

    Get in touch with insurance agents for best insurance quotes and more home insurance information and the latest trends.

  2. Raising deductible:
    Usually the more deductibles you pay reduces the amount of premium that you need to pay on your homeowner insurance policy. However, insurance companies have separate deductibles for areas that are disaster prone.

  3. Buying auto and home insurance from the same insurer:
    If you buy more than one insurance policy from the same insurance provider, the companies usually offer you a discount on your premium by 5% to 15%. Usually companies selling homeowner insurance also offer auto as well as umbrella liability policies. All that you need to do is calculate that this combined price is lower than what is offered by other companies.

  4. Rebuilding costs and cost of purchasing your home:
    The cost of rebuilding your home and the price at which you bought your home will be different. Do not get confused between the two. Carefully consider the value of your house so that you do not end up paying more premiums than required.

  5. Discounts:
    If you have smoke alarm, dead-bolt-locks and other such devices, the insurance company may provide you with a discount of around 5% at least. Some companies may even give you discounts on your premiums of about 5% to 15%. However, consider all kinds of situations and what your provider will offer before you buy these devices since these are not cheap.

  6. Group Coverage:
    Sometimes alumni and business groups do provide insurance package at a reduced rate. Enquire with your company if they have any option for a group insurance policy.

  7. Loyalty Discount:
    Staying with the same insurer helps. If you have received the services of a particular insurance company for several years before buying your home owners insurance, you may be entitled to a discount.

  8. Other Discounts:
    Your insurance company may have their own discount options. Ask them about the kind of discounts they offer and the conditions under which they offer such discounts.
Your home is your asset and you definitely want to protect it from any kind of harm. Purchasing home owner insurance is possibly the best way to do so. The homeowners insurance covers not just the structure of your home but also the contents provided you purchase the right policy. Have an agent talk to you and give you the details of such kind of a policy. Protect your home while you still can, because once disaster strikes it will be all over. Top

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PostPosted: Sat Feb 07, 2009 6:53 am   Post subject: Home Insurance: Home owners guide to insurance  

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PostPosted: Sat Feb 07, 2009 12:36 pm   Post subject:   

Lucy, I just want to throw something in here re:

Quote:
liability that might arise from visitors or passers-by.
the liability portion of an HO policy pretty much follows the insured and children...the incident does not have to happen on the property...medpay yes, liability no...for instances a 7 yrs old child (resident of the home) goes to a friends house miles away and damages their property in some way....let's say he's playing and spills something on the carpet that cannot be cleaned..throwing a ball and breaks a neighbors window....liability on mom and dads HO policy will handle this...(course this is a simplistic look at the claim many questions would have to be answered but you get the drift)..


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PostPosted: Sat Feb 07, 2009 10:35 pm   Post subject:   

Hmmm imagine that I actually new that. I think its a good thing that this coverage exists out of the home or off your own property. Either I am learning something on this forum or maybe watching too much Judge Judy.

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PostPosted: Tue Feb 10, 2009 6:25 am   Post subject:   

ohh god so many important things to keep in mind before going for home insurance policy:shock: But these policies are same worldwide? What I mean is if I go for a home insurance of some foreign brand will is be accepted in my country?

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PostPosted: Tue Feb 10, 2009 11:23 am   Post subject:   

I have no idea what is sold outside the US if anything...sorry horizon



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PostPosted: Thu Feb 12, 2009 6:57 am   Post subject:   

hmmmm ok..thanx for your reply



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PostPosted: Mon Apr 20, 2009 11:20 am   Post subject:   

You can choose to buy insurance for only the building (structure) of your home, or only the contents (belongings) or both.The policy covers the losses to the structure and contents of your home due to any natural and man made calamities.When shopping for insurance, it is important to understand what you are getting when you purchase a home owner insurance policy. Some people decide to buy insurance online by using popular online insurance quote websites and some stay with a local agent. Whatever choice you make, knowing and understanding your home insurance policy coverages is important.A Home Owners Insurance Policy is designed to protect home owners against certain perils. There is usually a deductible when filing a home insurance claim unless noted. Individual home insurance policies are determined by named perils and exclusions in a policy. Consult your agent or insurance company regarding any exceptions that may apply.


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PostPosted: Wed Apr 22, 2009 6:56 am   Post subject:   

A standard homeowners insurance policy includes four essential types of coverage. They include:



1. Coverage for the structure of your home.



2. Coverage for your personal belongings.



3. Liability protection.



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



Home insurance policy also protects against other hazards like gas cylinder explosion, fire due to electric short circuit as well as man-made disaster like burglary.



Home insurance policy available in the market covers broadly two things:



* Building structure

* Contents inside the home

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PostPosted: Tue Feb 09, 2010 5:45 pm   Post subject: home insurance  

I want to insure my home for 160000.00. I do not want to buy insurance for the replacement of the home. In other words, I do not want to pay for a piece of plywood sitting in a lumber yard is that possible.

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PostPosted: Tue Feb 09, 2010 7:23 pm   Post subject: Florida HO6 policies  

Is glass coverage mandatory for Florida HO6 policies? What is the form number?

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PostPosted: Fri Mar 05, 2010 8:20 pm   Post subject: am I covered  

If no one is living in the house right now, does my H05 coverage still apply?


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PostPosted: Mon Mar 15, 2010 12:16 pm   Post subject: housing insurance policy  

I want to get an insurance cover for my home in which earthquake and natural disasters are covered.


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PostPosted: Sat Mar 27, 2010 5:52 am   Post subject: am i civered for snow damage/  

The weight of snow has caused one deck and a retainer at my cabin to have damage. My insurance company immediately sent a so called geologist who took a 3 min look at the house and decided it is earth movement. I repaired a lot as we were in the midst of winter storms and the ins adjustor (theirs) told me to repair to stop the damage. Now they refuse to help me. I have discovered they are lying to me in regards to an imp matter. Can I sue? Why do they keep saying in their letters that I can't sue them? Thanks a lot for any help!


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PostPosted: Thu Apr 08, 2010 4:30 am   Post subject: cement floor foundation settling  

our floor in our downstairs is settling, about 3 inches between base board and the carpet now, it is the end of the downstairs where the yard slopes, when we bought the home there was a slight gap but 4 years later it's become large, I can fit my foot under the door, can feel a slope inside now


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PostPosted: Fri Apr 16, 2010 8:51 am   Post subject: Home insurance  

Home insurance is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections.


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