Definition of Basic Homeowners Insurance
Homeowners insurance is needed by any individual or family that owns their own home. A policy will need the proper amount of coverage as well as discounts to keep the total cost of the insurance policy reasonable. A homeowners insurance policy will cover many types of losses that are not specifically excluded on the policy. The amount of coverage that is needed will depend on factors that include the cost to replace the home as well as its contents.
Other People Are Reading
-
Requirements
-
A homeowners insurance policy is not only needed to protect from any unforeseen losses that can occur, it may also be a requirement. Most mortgage lenders as well as banks that provide loans for purchasing a home require that borrowers obtain a homeowners insurance policy as a condition for receiving the loan. This is to protect the lender in the event a loss or damage occurs as the result of a storm or some other unforeseen event.
Policy Types
-
There are many different types of homeowners policies that can be purchased to provide various types of coverage. The basic type of homeowners policy is called an HO-3. This type of policy provides coverage for all perils that have not been excluded on the policy. An HO-6 policy is a type of policy that is available for condominium buildings. In addition to personal property coverage, the policy provides coverage for liability and improvements that are made to the building.
-
Coverage
-
A homeowners insurance policy has various types of coverage. One type of coverage is for replacement cost, which is the total cost to replace the dwelling in the event of a total loss. Another type of coverage is for personal property or contents of a dwelling. A typical policy provides coverage for contents, such as furniture, appliances and electronic equipment. This amount is typically up to 40 percent of the total insured value of the home.
Endorsements
-
An endorsement is an addition to a policy that can be used to provide additional coverage without the need for the insurer to rewrite a new policy. An endorsement can be used to provide more coverage than is available in a standard homeowners insurance policy. One type of endorsement is available for certain types of personal property, such as jewelry, collectibles or other items, that a standard policy does not cover. This is called a "scheduling" personal property on a policy.
Discounts
-
The cost of a homeowners insurance policy can vary depending on the type and amount of coverage that is selected. One way to reduce the cost of a policy is to include all of the discounts that are available. A discount is typically available for protective devices, such as deadbolt locks, smoke alarms and fire extinguishers. Discounts can range from 5 percent up to 30 percent or more depending on the type of discount that is being applied.
-
