Insurance

Save Money When Shopping for Home Insurance

Homeowners insurance, sometimes referred to as “hazard insurance” or simply “home insurance,” is property insurance designed to cover private homes and their contents.

Homeowners insurance is a multi-line policy, meaning that the premiums, or regularly scheduled payments made to the insurer, cover both property and liability insurance. The premium is usually determined by the replacement cost of the home and its contents.

There are three major reasons to buy homeowners insurance:

  • To provide property coverage: Homeowners insurance covers the physical structure of your home and your personal property if it gets damaged or destroyed.
  • To provide liability coverage: If someone who isn’t covered under your policy is injured or killed, or their property is damaged or destroyed while they’re on your property, your homeowners policy will cover your personal legal responsibility. This coverage extends to cases where damage or injury happens adjacent to your property, such as when the limb of a tree on your property falls on a parked car on the street.
  • To satisfy your mortgage lender: To get a mortgage from a bank, most lenders insist you have insurance as long as you have a mortgage; you also have to list the lender as the mortgagee on the policy.

Additionally, your policy generally covers such expenses as staying in a hotel or renting an apartment during the period when your home is being repaired following a disaster. In most cases, it requires that at least one of the individuals named on the policy actually live on the premises.

Types of Homeowners Insurance

The best homeowners insurance will cover all perils except for those that are specifically excluded in the policy language. Here are the types of policies offered:

  • Basic Homeowners Policy, HO-1: This is a basic policy that protects the homeowner against 10 basic perils such as fire or smoke, explosions, lightning, volcanic eruptions and damage from aircraft.
  • Broad Form Policy, HO-2: The Broad Form policy covers all the 10 perils in the basic policy, plus a few more, like accidents from electric currents. Your structure, your personal belongings and your personal liability are covered.
  • Special Form Policy, HO-3: This policy covers everything in the Broad Form policy, plus more. This policy covers you if you damage someone’s property or injure them.
  • Tenant’s Form, HO-4: Tenant’s form is for renters and is commonly known as renters insurance. It covers your personal belongings and personal liability.
  • Comprehensive Form, HO-5: This policy is comprehensive because it covers more perils than other policies. This policy is similar to the Special Form policy in that it can financially protect you from all perils except for ones specifically stated as not covered in your policy.
  • Condominium Unit Owners Form, HO-6: This is for owners and/or occupants of condominium units. It insures your personal property and your walls, floors and ceiling against all of the perils and also extends coverage for damage to additions and/or alterations that the unit owner may have made, up to specified limits. Usually, this coverage for alterations kicks in only after any insurance limits are reached by policies (if any) that are purchased by the condominium association.
  • Mobile Home Form, HO-7: This is similar to the Special Form policy, but it is specifically for mobile homes. Mobile homes don’t have the same coverage as regular homeowners insurance.
  • Older Home Form, HO-8: This is for older homes where the cost to rebuild is greater than the market value. It covers the same set of perils as the Basic Homeowners policy.
  • Dwelling Fire Form: This policy only covers your dwelling and only for a few specific perils. It does not cover your personal property, personal liability or medical payments. This coverage is a popular option for vacation homes. It’s also the kind of limited policy your mortgage lender will purchase for you if you let your homeowners policy lapse.

If you own a town house, you may insure it through an individual homeowners policy or an association policy – sometimes referred to as a group policy.

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