Homeowner's Insurance Definition

A homeowner's insurance policy has a number of benefits.

Homeowner’s insurance policies can be beneficial to owners of single-family residences and owners of homes with multiple units. Also, apartment renters can obtain renter’s insurance for their possessions. The policy limits applicable to a homeowner’s insurance policy encompass property coverage, liability coverage and living expenses. The named person insured and other individuals who qualify as persons insured under the policy are entitled to coverage.

Property Coverage

The property coverage under the homeowner’s insurance policy indemnifies the insured for damages to the property that are covered under the policy. The policy stipulates the property that is considered covered property. It usually includes the property dwelling and other structures connected with the property. Moreover, to receive payment for damages to covered property, the insured must have an insurable interest in the property. If the insured receives a benefit from the property, such as a financial benefit, he has an insurable interest in the property.

Covered Structures

The insurance under a homeowner’s policy covers the residence, and it can include other premises or structures. For instance, vacation homes and rented premises can be covered under the policy.

Conditions

Most homeowner’s insurance policies contain conditions applicable to the property coverage. The conditions generally list the acts that the insured must do or refrain from doing when an insurance claim is made. The conditions also can determine how claims will be valued and how losses will be paid. The conditions in the policy for liability coverage are usually separate from the property coverage conditions.

Property Value

Depending on the policy, the insured can receive full reimbursement of the cost of the damaged property or the fair market value of the property. The fair market value, also known as the cash value of the property, is the value of the property minus depreciation.

Liability Coverage

Liability coverage under the homeowner’s insurance policy covers accidents on the premises that injure anyone other than the persons insured under the policy. It protects the insured from lawsuits resulting from these injuries. If a third-party claim is made against the insured, the insured must notify the insurance company. If the loss is covered under the policy, payment is made to the third party making the claim against the insured.

Living Expenses

A homeowner’s insurance policy can cover living expenses after a loss to the insured’s residence.

Renter's Insurance

The owner of an apartment complex usually has a homeowner’s policy. However, apartment renters can obtain a renter’s insurance policy for damages to personal property.

References

• Bankrate: Understanding Your Home Insurance Policy