Why Homeowners Insurance Is Necessary
For most people the home is often their largest asset. Home
insurance can protect a house and its contents from a variety
dangers such as fire, wind, hail, water damage, freezing and
theft. Coverage may also include liability insurance that
protects the homeowner from expenses arising from accidents
or injury on the owners property. The policy may also pay
for the loss of other personal property or the loss of the
use of a home. The cost of many home insurance policies is
often quite reasonable; because of this families should consider
such a policy essential for their financial security.
Generally earthquakes, floods and 'acts of god' or war are
not covered in a standard homeowners Insurance policy although
separate policies can be bought to cover these events.
And while insurance is a good consumer purchase for any homeowner,
it is often required by a mortgage company to protect the
loan.
Generally a policy is a term contract. A premium or premiums
must be paid on time to keep the contract in force until the
contract ends. At this point the contract can usually be renewed
although the new premiums may be more or less than the old
ones.
How Much Home Insurance Should You Get
A home should be insured for its replacement value, meaning
the cost of repairing or rebuilding the home at today's prices.
This means, for example, that an older home should be insured
for the amount of money it would take to rebuild part or all
of the structure if the house were to be damaged. At the very
least an owner should insure the home for eighty percent of
its value. Some companies will not pay for full replacement
costs for partial damage unless the structure is insured at
eighty percent or more. And while the home might be repaired
at current replacement costs, personal property is often valued
at its depreciated value. This means that a policy might only
pay five hundred dollars for a damaged three year old computer
that cost one thousand dollars initially.
Types Of Homeowners Policies
Homeowners policies are given the notation of H-1 to H-8.
These policies can cover everything from specifically named
items, to specific events and portions of a home, to a blanket
coverage, to condominiums, or mobile homes or coverage for renters.
For a detailed definition of each of these types of policies
visit the Wikipedia page on home insurance here:
http://en.wikipedia.org/wiki/Homeowners_insurance
The most common home insurance is an H-3 policy known as
a "all risk" or "open perils" policy.
This package of home policy often covers the house, the contents,
liability, and other potential dangers and is the one generally
required by a mortgage company for a private home. Compare
the same type of policy with different insurers to find the
lowest cost coverage.
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