Home insurance basics

Home Insurance Basics

Home insurance basicsWhen shopping for home insurance, it is important for a homeowner to consider more than how much coverage will cost. As insurance agents, we must work with each customer to consider their unique situations to make sure the correct policy is purchased to fit their needs. Some considerations include the proper level of protection, additional coverage for natural disasters and special provisions for valuables such as jewelry, computer equipment and other possessions.

When applying for a mortgage, many lending institutions have established of policy requiring customers to purchase homeowners insurance. It is not always in your best interest to rely on the coverage levels mandated by your bank or mortgage company. Many times, these levels are designed to only protect the house itself, not necessarily your possessions. It is beneficial to you to check with your agent or insurance company to make sure you have adequate coverage.

Attorney Oleh Mahlay recommends that you carefully evaluate your home insurance needs as the home is one of our highest value assets and the site of most of our personal property. “While individuals fail to pay attention to their insurance agent’s advice or spend the time to look over their policy, home insurance is crucial if an unfortunate event takes place involving your residence.”

Basic policies

There are several basic types of home insurance policies:

HO-1
• Basic homeowner’s policy Covers your house and possessions against 11 different perils.
HO-2
• Broad homeowner’s policy Covers house and contents against 17 perils. Premiums run about 5 percent to 10 percent higher than an HO-1 policy.
HO-3
• Special homeowner’s policy Covers all perils except those specifically excluded by the policy. Costs 10 percent to 15 percent more than an HO-1 policy.
HO-4
• Renters Policy Covers 17 named perils and includes liability coverage. It does not insure the dwelling itself.
HO-5
• Extensive homeowners policy Covers damage from practically everything except earthquakes, wars and floods.
HO-6
• For owners of co-ops or condominiums Provides personal property coverage, liability coverage and specific coverage of improvements to the owner’s unit. Insurance provided by the owner’s association normally covers most of the actual structure.
HO-8
• Policy for older homes Covers the same perils as HO-1 but pays only for repair costs or actual cash value, since replacement cost could make the policy costly.

Each of these policies have variations to cater to many different situations. For example, landlords can buy coverage that insures only their buildings and not your personal property (which is what a renter’s policy would cover). You can also get special policies to cover mobile homes (a.k.a. manufactured housing).

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